Storms in Sunny States: Fraud in the Addiction Treatment Industry

Abstract

This paper studies health care fraud in the drug and alcohol treatment industry: what it is, how it happens, and how to stop it. The paper aims to answer, what are the problems posed by health care fraud and abuse in the substance abuse recovery industry? What are the prevention and enforcement goals? And when do authorities fail to meet these goals? The general problem this paper identifies and agrees with is that the drug recovery industry is still victim to high levels of health care fraud despite recent efforts to fight fraud. As a result, vulnerable patients suffer in subpar treatment centers. The specific problems this paper identifies are as follows. First, one key federal statute targeting health care fraud in the addiction industry is unclear and provides too-lenient penalties. Furthermore, regulatory guidance for such statutes is absent. Finally, inconsistent accreditation and licensing standards pave the way for fraudulent providers to fly under the radar.

This paper argues that the solution to high health care fraud rates in the recovery industry is a combined approach. Congress should either amend EKRA or the Department of Justice (DOJ) ought to issue regulations or guidance to clarify EKRA. Local investigators should coordinate with opioid strike forces. And Congress should pass new legislation. Part I studies the background behind health care fraud in the drug recovery industry. The provision and financing of health care in the recovery industry, common health care fraud schemes in the industry, and the victims and impact provide a landscape of the industry. Next, Part II assesses investigation, prosecution, and enforcement for health care fraud in the recovery industry. Part II initially identifies the statutes implicated in drug recovery health care fraud. Then, it relays the regulators and other actors charged with investigating health care fraud in the recovery industry. Next, Part II offers examples of recent prosecutions and penalties. Part II also reveals prevention and enforcement goals as well as challenges to investigation, prosecution, and enforcement. Finally, Part III reveals strategies for the future. Combining cooperative strategy between local investigators and specialized forces, enhanced penalties in enforcement, regulatory guidance, and revised and new legislation provides the best chance of combatting fraud in the recovery industry.

Note:
Funding Information: None to declare.

Declaration of Interests: None to declare.

Keywords: EKRA, fraud, health care, DOJ, prosecution, crime, kick-backs, AKS, Florida, South Florida, California