State AG accuses treatment firm of exploiting addicts and insurers

This story has been updated with additional details.

(Harrisburg) — The Pennsylvania attorney general’s office charged the co-founder and executives of an addiction treatment firm Monday and accused them of profiting off addicts by fraudulently billing insurance companies for tens of millions of dollars, with little seeming regard for the welfare of the addicted person.

The charges announced by Attorney General Josh Shapiro against 11 people in Pennsylvania, New Jersey and Florida, and nine corporations revolves around Liberation Way, a for-profit treatment company with centers in suburban Philadelphia that was sold to a private equity firm in 2017 for nearly $42 million.

Shapiro said the two-year investigation found more than $44 million in profits from fraudulent schemes. In some cases, the addicted people returned again and again for treatment, leading to more and more fraudulent billing by Liberation Way, Shapiro said. The attorney general’s office began investigating based on information it received from the state Department of Drug and Alcohol Programs.

A phone message seeking comment was left at a number listed for Jason Gerner, a Liberation Way co-founder and one of the people charged. Court officials say no attorney is listed for him.

The schemes include billing for substandard, nonexistent or unnecessary treatment, Shapiro said. State charges include dealing in proceeds of unlawful activities, criminal conspiracy, insurance fraud and identity theft. Federal conspiracy charges have also been filed.

One scheme involved illegally signing up addicted people for insurance policies and then paying their insurance premiums in ways that hid the source of the money, authorities said. That included cash, pre-paid Visa gift cards and bank accounts of two non-profit organizations created by Liberation Way’s owners, they said.

Shapiro also said the company got kickbacks from insurance coverage of unnecessary urine lab tests from a Florida firm and by warehousing addicts in poorly run and unlicensed inpatient facilities that it owned.

The schemes often inflicted suffering on the addicted people, Shapiro said.

If insurers didn’t pay lab fees in full for unnecessary urine tests, Liberation Way had the labs demand that patients and their families pay the outstanding balances, Shapiro said.

Meanwhile, one of the treatment homes was known as the “party house,” Shapiro said. Patients there were in “unsavory or even unsafe situations where the temptation to relapse was rampant,” authorities said.

Patients who relapsed would re-enter treatment at a higher level of care, and Liberation Way billed insurers for higher rates of reimbursement. Liberation Way cycled patients through the treatment process as many times as possible, even as many as eight times, authorities said.

The private equity firm that bought the majority interest in Liberation Way, Fulcrum Equity Partners, absorbed Liberation Way’s treatment centers into a company called City Line Behavioral Health.

Two of the three former Liberation Way centers remain open, and all the treatment, programming and staffing in the centers is brand new and credentialed, a City Line spokeswoman said.

An earlier version of this story appears below.

(Harrisburg) — The Pennsylvania attorney general’s office is charging the co-founder and executives of an addiction treatment firm and accusing them of profiting off addicts by fraudulently billing insurance companies for tens of millions of dollars.

Attorney General Josh Shapiro announced the charges Monday against 11 people and nine corporations. The case revolves around Liberation Way, a for-profit treatment company with centers in suburban Philadelphia that was sold to a private equity firm in 2017.

Shapiro says the two-year investigation found more than $44 million in profits from fraudulent schemes.

Those alleged schemes include billing for substandard, nonexistent or unnecessary treatment, generally targeting out-of-network insurance carriers.

Shapiro also says the company got kickbacks from insurance coverage of unnecessary urine lab tests and warehoused addicts in poorly run unlicensed inpatient facilities.