Addiction Recovery Care and Affiliates Pay $16.2M Civil Judgment to Resolve Kentucky Medicaid Fraud Allegations
By the Constantine Cannon Whistleblower Team
Kentucky-based Addiction Recovery Care, LLC (“ARC”), plus its affiliates Pioneer Health Group, LLC and Science Hill Family Care, LLC, agreed to pay $16,205,774 to resolve allegations that they defrauded the Kentucky Medicaid program and violated the False Claims Act, a federal statute that prohibits submissions of false claims for payment to government healthcare programs.[1]
What Does ARC Offer?
ARC runs residential and outpatient drug rehabilitation facilities. With its affiliates, ARC offers behavioral healthcare and medical healthcare services to patients at their rehabilitation facilities.
How Was Kentucky Medicaid Allegedly Defrauded?
The government alleged ARC misrepresented clinicians’ qualifications on Kentucky Medicaid claims to obtain higher reimbursements. From January 2018 through March 2024, ARC allegedly billed certain behavioral health services — including psychotherapy, psychiatric evaluations, and mental health assessments — as if they were provided by higher-credentialed employees, even though lower-level healthcare workers performed them.[2]
The government also alleged that from July 2019 to mid-June 2021, ARC billed for individual therapy sessions, which Kentucky reimbursed at a higher rate while it provided less costly group therapy. These overstatements of provider qualifications and individualized care, commonly known as upcoding, are prohibited by federal health insurance programs and caused ARC and its affiliates to receive payments they were not entitled to.[3]
The United States claimed that from January 2019 through December 2024, ARC’s affiliates submitted duplicate office-visit claims to Kentucky Medicaid and billed for visits already covered by an inclusive per diem rate. One affiliate also allegedly billed for care management services that did not satisfy Kentucky Medicaid coverage requirements, including services performed by ARC employees without the required credentials.[4]
Were Whistleblowers Involved in This Case?
In April 2023, current and former ARC employees filed a complaint under the qui tam provisions (or whistleblower provisions) of the False Claims Act, which allows private parties to file lawsuits on behalf of the government and receive a portion of any monetary recovery.
The relators (or whistleblowers) alleged that ARC and its affiliates submitted fraudulent claims for payment for behavioral health services provided in their drug rehabilitation programs and defrauded the Kentucky Medicaid program.
The government investigated whether ARC violated the False Claims Act. During the investigation, ARC self-disclosed that it had improperly billed for services including those detailed in the qui tam complaint.
More About the Judgment’s Total Amount and Whistleblower Award
The amount of the judgment was negotiated and reduced due to the Defendants’ financial condition and future operation prospects. The relators are eligible to receive an undisclosed portion of the recovery.[5]
Our Firm Helps Healthcare Fraud Whistleblowers
According to Constantine Cannon partner Marlene Koury: “Medicaid depends on providers accurately reporting who delivered care and what services patients received. Cases like this highlight the important role whistleblowers play in identifying improper billing and helping the government recover taxpayer funds.”
Our firm has significant experience representing whistleblowers under the False Claims Act. If you believe you have a case or would like to learn more about what it means to be a whistleblower, please contact us. We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consultation.
Speak Confidentially With Our Whistleblower Attorneys
[1] See https://www.justice.gov/usao-edky/pr/addiction-recovery-care-and-affiliates-agree-pay-162-million-civil-judgment-resolve.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
Tagged in: False Claims Act, Medicaid,