Medi-Cal Fraud Targeting Drug Rehab Clinics

As a health care fraud law firm, we work with private whistleblowers nationwide to protect taxpayer money and ensure the health of millions of Americans.  Often, scammers who defraud the federal system also target state health care programs.  We work to fight this type of fraud too, recognizing that these systems are also vital to the health and well-being of countless individuals.  While we can handle health care fraud matters across the country, we have particularly strong ties to California and Florida.  In today’s post, we look at a problem plaguing California – Medi-Cal fraud involving drug treatment clinics.

Director Apologizes for Medi-Cal Fraud

Last September, The Center for Investigative Reporting (“CIR”) reported on legislative hearings in which Toby Douglas, the director of Medi-Cal, apologized for systemic problems involving the failure to effectively monitor taxpayer-funded drug rehabilitation programs.  In the course of those hearings, it became clear that the agency knew about widespread sham billing by “rogue clinics” as early as 2007.  In 2014, the agency temporarily suspended 73 clinics and 101 other counseling sites, locations that had bilked Medi-Cal out of more than $36 million in the previous fiscal year alone.  At the time of the report, there were at least 64 on-going fraud investigations looking into these scams.

Investigative Report: Scheme Targeted Taxpayer Money, Took Advantage of Vulnerable Californians

In December, the CIR followed up with an in-depth article examining Medi-Cal drug rehabilitation clinic fraud.  According to the CIR investigation, an illegal marketplace of grew in California in response to the demand for Medi-Cal eligible clients.  Clinics would bribe residents and provide kickbacks to home operators, ultimately using beneficiary information to bill Medi-Cal for drug rehabilitation services that were never provided and were often unnecessary.

This general scheme appeared in many different forms.  Clinics would bring teens by the busload from foster care homes despite the fact that many of the so-called clients didn’t need drug addiction treatment.  Vanloads of elderly healthcashand/or mentally impaired individuals were brought in from group homes, individuals who didn’t need drug treatment and often didn’t understand what was happening.  The clinics would bill for services even when counselors were not on duty and would create fake therapy notes for ineligible “ghost clients.”  As the report states, these individuals were not viewed as patients needing care but instead “[e]ach warm body is a renewable resource, representing about $27 in government funding for a group counseling session and $64 for a one-on-one appointment.”  A man who worked for one of the clinics described the Medi-Cal beneficiaries as “pieces on a board…being shuffled around.”  These schemes led to millions of dollars going to fraudulent clinics and into the pockets of scammers.

The Danger of Health Care Fraud, The Fight to Stop It

These schemes are a prime example of the multi-faceted danger of health care fraud schemes.  Perpetrators prey on vulnerable individuals, taking advantage of them and often putting their health at risk while stealing millions from tax-payer funded systems.  As the schemes grow, the impact grows.  People who actually need the services that the scammers purport to provide suffer as limited funds are diverted into criminals’ pockets.

Whistleblowers, private citizens who have knowledge about health care fraud schemes, are essential to the fight against fraud in the federal health care system and its state equivalents.  Like the federal system, state law specifically provides for the protection of whistleblowers from retaliation and for significant rewards to whistleblowers whose honesty and bravery lead to the recovery of diverted funds.

If you have information about fraud on the California’s health benefits system, call our Medi-Cal fraud law firm.  Our firm also serves as whistleblowers’ counsel in cases involving federal health benefits fraud and fraud targeting the health benefits systems of other states.

See Related Blog Posts:

California Whistleblowers’ Law Firm Shines a Spotlight on Medi-Cal Fraud

Medicaid Fraud: Health Care Fraud Targeting Another Government Program

(Image by Flickr user 401(K) 2013)