Fraud In Substance Abuse Programs Bringing New Regulation in….. Utah?

Happy Star Wars Opening Day! Ok, it technically opened last night at 7pm, but many of us have been literally counting down the days so that we can go back to being 6-year-old boys again and see the movie with our own kids.

In today’s dispatch, we write about how health care fraud within the behavioral health care space knows no geographic boundaries. While people will like to call Delray Beach as the “Recovery Capital of the United States,” that simply is not an accurate statement but rather a label placed upon the City by the New York Times back in 2007, actually as a compliment to the City’s enlightened approach to Substance Use Disorder treatment providers and housing.


That said, Delray Beach and all of Florida, as well as California, Texas, New York, New Jersey, Pennsylvania, Minnesota and various other states have experienced the accompanying financial fraud which follows health care across this nation.


The latest state to take action is Utah.


As reported in the Deseret News (Wendy Leonard, 12/2/2015, “Fraud in substance abuse programs could bring regulation”):


Allegations of fraud and other criminal practices are impacting care and prompting lawmakers to consider a plan to properly license and regulate substance abuse treatment facilities in Utah. The regulations would develop a standard of care, as well as educate the public of the quality and variety of programs available.


The disturbing problems in the industry were brought to light after the task force heard serious allegations of health-insurance fraud being conducted at several treatment centers throughout the state. Patient brokering is also believed to be yielding substantial financial rewards, according to Eric Schmidt, president of the Utah Association of Addiction Treatment Providers, who spoke to lawmakers at Thursday’s meeting.


“It’s everything from billing for services that don’t occur, billing for clients sitting at a provider’s home, to identity theft and patient brokering,” he said, adding that the alleged criminal practices have resulted in defrauding insurance providers and families of millions of dollars.


Schmidt said the alleged fraud isn’t widespread and that “most” of the more than 300 licensed residential treatment centers in the state are not dishonest. But the problems erode public trust, which is already an issue in an industry that deals with matters of substance abuse and mental health.


Even with regulation and licensing, funding of such regulators from the state is another hurdle altogether.  Social services tend to receive the brunt of budget cuts year after year, as the “return of investment” is not immediate but rather long term.


We stand behind the concept of a “whistle-blower” statute which would empower employees as well as patients at treatment programs and recovery residences to be able to “blow the whistle” on illegal practices and stand to make a cash windfall for proven cases.


As of right now, there is no legal mechanism existing to do so, outside of providers who accept Medicare or Medicaid.


These so called “Qui Tam” cases have been filed under the False Claims Act, wherein a private citizen may sue an individual or a business that is defrauding the government and recover funds on the government’s behalf. The qui tam lawsuit is filed “under seal,” meaning that it is kept secret from everyone but the government to give the Justice Department time to investigate the allegations.


By way of example, Florida’s “False Claims Act” is found within Sections 68.081-68.092 and allows whistleblowers to file “qui tam” lawsuits if they know of violations of that state law. The Florida False Claims Act imposes liability on people and corporations who, among other violations, knowingly present fraudulent or false claims for payment to the state; misappropriate state property; or deceptively conceal or avoid an obligation to pay the state.


A defendant may be ordered to pay up to three times the actual harm to the state, plus a fine of between $5,500 and $11,000 for each violation of the Act. A whistleblower filing a False Claims Act case may receive between 15 and 25 percent of any recovery in matters joined by the Florida Attorney General, and between 25 and 30 percent of the recovery if the whistleblower proceeds on his own. The court may reduce the amount of the award if the whistleblower’s allegations are based on publicly disclosed information, or if the whistleblower planned and initiated the fraud.


Plaintiffs must file their complaint within ten years of the date on which the violation occurred.


The Florida False Claims Act also protects whistleblowers from retaliation by their employers.


Again, while such suits are currently limited to Medicare (federal) and Medicaid (state) fraud matters, perhaps it is time for the legislatures of our states to try to find legal ways to further empower citizens to join in the fight against health care fraud (rather than bloat state and federal budgets with more untrained regulators).

Health care fraud in the medical care field seems to boil down to a battle over fraudulent access to taxpayer dollars.

Fraud in behavioral health care including SUD treatment often and regularly actually hurts the patients themselves.

About Jeffrey Lynne

Jeffrey C. Lynne is a South Florida native, representing individuals and business entities relating to licensing, accreditation, regulatory compliance, business structure, marketing, real estate, zoning and litigation pertaining to substance abuse treatment facilities and sober living residences. Mr. Lynne has been recognized across the region as a leader in progressive public dialogue about the role that substance abuse treatment has within our communities and the fundamental need and right to provide safe and affordable housing for those who are both in treatment for addiction and alcoholism as well as those who are established in their recovery.