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Fraudulent Behavioral Health Scheme Uncovered in Arizona Targets Vulnerable Populations: Insights from Kirti Reddy

In recent years, one of the largest behavioral health fraud schemes in the United States was uncovered in Arizona. This scheme specifically targeted homeless individuals and/or Native Americans for fraudulent substance use treatment. Kirti Reddy, a partner at Quarles & Brady and co-chair of the firm’s Government Enforcement Defense and Investigations team, provided insight into the two primary categories of fraud that were uncovered.

Firstly, fraudulent billings by behavioral health treatment providers were a significant part of the scheme. These providers were found to be billing for services to the Arizona Health Care Cost Containment System (AHCCCS) for treatment that was not actually provided or necessary. Additionally, patient brokering, which involves referring patients to addiction treatment providers in exchange for payment, was also a major component of the fraud.

The perpetrators of the scheme also reportedly bribed victims by offering housing in unlicensed “sober living” homes, and enrolled non-Native Americans in Arizona’s American Indian Health Program. Subsequently, victims were sent to behavioral health treatment centers not for the purpose of receiving proper treatment, but simply to allow the treatment centers to bill for services to AHCCCS. This exploitation of vulnerable individuals is both disheartening and concerning, and the uncovering of this scheme sheds light on the need for increased oversight and accountability in the behavioral health industry.

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