Children’s Behavioral Health Services Operators Agree to $15.2M Civil Judgment Over Medicaid Fraud Allegations Brought by Whistleblowers
By the Constantine Cannon Whistleblower Team
On May 15, the U.S. Attorney’s Office announced a $15.2 million judgment as part of a settlement with the operators of a day treatment program for children with mental health and behavioral needs. The settlement resolves allegations the programs defrauded Kentucky and Ohio Medicaid by inappropriately billing for non-healthcare activities and falsely represented the qualifications of some clinicians to receive higher reimbursements.[1]
Who Was Included in the Judgment?
The judgment is part of a civil settlement including allegations that Recovery Center of Kentucky, LLC, Recovery Center of Ohio, LLC, Recovery Center of Maryland, LLC, their parent company, Recovery Center of USA, and CEO, Dr. Warrick Stewart, violated the False Claims Act, which prohibits the submission of false claims for payment to government programs, including Medicaid.[2]
What Was the Alleged Fraud Scheme?
Recovery Center of Kentucky and Recovery Center of Ohio operated the Aspire Day Program, offering day treatment services to children with specific needs. These types of day treatment programs often include group and individual therapy as well as other behavioral health services, and can be provided alongside educational activities.
The Kentucky and Ohio Medicaid programs cover day treatment but only pay for when children are receiving any behavioral health services. The programs do not cover non-healthcare activities.
According to the government, the Recovery Centers allegedly requested Medicaid payments from August 2022 through June 2025 at the Aspire Day Program for non-healthcare activities, including recreation time, lunch breaks, and education. This purportedly resulted in the Recovery Centers’ receiving millions in Medicaid reimbursements they were not entitled to.[3]
Alleged Misrepresentation of Clinicians’ Qualifications
The government also alleged that Recovery Center of Kentucky misrepresented some clinicians’ qualifications on Medicaid claims to obtain higher reimbursement rates. According to the settlement agreement, the Aspire Day Program billed services as though they were provided by more highly licensed staff, even when they were performed by lower-level workers. In some cases, Recovery Center of Kentucky allegedly billed Medicaid for services as if they were provided by a licensed professional even though the employees were not qualified to provide day treatment services at all.
The government alleged that Recovery Center of USA and its CEO, Dr. Warrick Stewart, violated the False Claims Act because they oversaw staffing decisions, compliance with federal healthcare programs, and the submission of claims to Kentucky and Ohio Medicaid.
What Is the Judgment Amount Based On?
Under the civil settlement agreement, the judgment will be satisfied based on the defendants’ limited ability to pay, including payments from future distributions, and the transfer of ownership rights to some of Dr. Stewart’s property.
Remarks on the Case
Jason Parman, First Assistant United States Attorney for the Eastern District of Kentucky, commented: “Vulnerable populations, like children who need behavioral health services, deserve to be treated by qualified clinicians. Our office is committed to investigating behavioral healthcare fraud to ensure that Kentuckians receive necessary medical care and that Medicaid programs only pay for covered services.”
Were Whistleblowers Involved in Filing this Action?
Yes, this settlement and civil judgment resolve a lawsuit brought by whistleblowers under the qui tam (or whistleblower) provisions of the False Claims Act, allowing private parties to file actions on behalf of the government and receive a portion of the government’s recovery. According to the press release, the whistleblowers who filed this complaint are eligible to receive an undisclosed amount of the settlement.
According to Constantine Cannon partner Marlene Koury: “Whistleblowers are often instrumental in initiating these sorts of cases. Our firm represents whistleblowers who want to fight fraud by bringing information like this forward.”
Our Firm Represents Health Care Fraud Whistleblowers
Our firm has extensive experience representing health care fraud whistleblowers. If you believe you have a case, please contact us to speak with an experienced member of the Constantine Cannon whistleblower team for a free, confidential consultation.
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[1] See https://www.justice.gov/usao-edky/pr/operators-day-treatment-program-children-agree-152-million-civil-judgment-resolve
[2] Id.
[3] Id.
Tagged in: False Claims Act, Medicaid fraud,