Friday, February 10, 2017

Six Florida Defendants Including Two Doctors Charged in Private Insurance Health Care Fraud Involving Sober Homes, Alcohol and Drug Addiction Treatment Centers and Drug Testing

Private insurance companies are aggressively pursing investigations into drug and alcohol rehabilitation centers, sober living homes, laboratories who process drug testing and physicians who make referrals. 

The referrals from licensed treatment centers to sober living facilities owned by the same or related parties is one red flag. In addition, a common issue is whether reduced rent to impoverished or unemployed clients is a referral payment. 

The cases that have more extreme facts are the ones that then get referred for criminal prosecution. A recent case has extreme facts alleged including billing for services not provided, falsification of records, not discharging clients using drugs, and excessive or unnecessary urine drug testing. 

On December 21, 2016, six Florida defendants, including owners, doctors, and an employee of sober homes and alcohol and drug addiction treatment centers were charged in a health care fraud scheme for filing fraudulent insurance claim forms and license applications and defrauding health care benefit programs.

Kenneth Chatman, Dr. Joaquin Mendez, Dr. Donald Willems, Fransesia Davis, Michael Bonds and Laura Chatman are charged in a Criminal Complaint with conspiracy to commit health care fraud, in violation of Title 18, United States Code, Section 1349.  Kenneth and Laura Chatman are also charged with making false statements related to a health care matter, in violation of Title 18, United States Code, Section 1035(a)(1).  The charges and allegations contained in a Criminal Complaint are merely accusations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. 

According to the Criminal Complaint, defendants Chatman, Davis, and Bonds established four sober homes, including Stay’n Alive, Inc., Redemption Sober House, Inc., and Total Recovery Sober Living LLC, and an unnamed facility at 962 West 43rd Street, West Palm Beach, in Palm Beach County, Florida, which were purportedly in the business of providing safe and drug-free residences for individuals suffering from drug and alcohol addiction. 

The Complaint alleges that to obtain residents for the sober homes, some members of the conspiracy provided kickbacks and bribes, in the form of free or reduced rent and other benefits, to individuals with insurance who agreed to reside at the sober homes, attend drug treatment, and submit to regular drug testing that members of the conspiracy could bill to the residents’ insurance plans. 

One of the allegations is that although the sober homes were purportedly drug-free residences, some of the defendants permitted the residents to continue using drugs as long as they attended treatment and submitted to drug testing.

Defendants Kenneth Chatman, Bonds, and Davis allegedly referred the sober homes’ residents with insurance to treatment centers owned by Kenneth Chatman but titled in the name of Laura Chatman. These treatment centers purportedly offered clinical treatment services for persons suffering from alcohol and drug addiction. It was alleged that in some or most instances, Mr. Chatman knew that the sober home residents referred to the treatment centers, Journey to Recovery LLC, in Lake Worth, Florida, and Reflections Treatment Center, LLC, in Margate, Florida, were using drugs.

Mr. Chatman allegedly hired doctors, including Drs. Mendez and Willems, to serve as medical directors of his treatment centers. The doctors allegedly ordered drug treatment and drug testing for the sober home residents, specifically expensive urine and saliva drug screens and allergy testing, regardless of whether such treatment and testing were medically necessary. 

It was alleged that the defendants provided services meant solely to maximize insurance reimbursements. In some instances, Mr. Chatman and Ms. Davis submitted urine and saliva samples from employees instead of urine and saliva from patients. 

In other instances, Mr. Chatman allegedly caused confirmatory testing to be performed and billed for residents who left the sober homes and were no longer receiving treatment at the treatment centers. Doctors Mendez and Willems allegedly also falsely documented patient files to make it appear as though they reviewed the test results.

The more extreme allegations are that Mr. Chatman and Ms. Davis engaged in various tactics to keep patients from being able to leave Reflections and Journey, including threatening violence, and confiscating their belongings, such as car keys, telephones, medications, and food stamps, in order to maintain the ability to continue fraudulently billing the insurance companies.  It is common for sober living and treatment centers to take medications and cell phones and any funds for sobriety reasons so it would need to be shown that these were for non-treatment purposes.

The allegations got more outrageus with the Complaint alleging that Mr. Chatman and Ms. Davis recruited and coerced female patients and residents into prostitution, telling them that they would not have to pay rent or participate in treatment or testing so long as they would allow him to continue to bill their insurance companies for substance abuse treatment and testing that the patients did not receive.

It is also alleged that there was self-referral in that Kenneth and Laura Chatman allegedly submitted to the Florida Department of Children and Families fraudulent applications for licensure for Journey to Recovery and Reflections Treatment Center, stating that Laura Chatman was the sole owner of those entities and hiding the fact that Kenneth Chatman owned and operated the treatment centers.

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Phone: 213-233-2260


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