Substance Abuse Treatment Facility Settles Qui Tam Case

California-based CRC Health Corp. (“CRC”) has agreed to settle allegations by a whistleblower in a qui tam lawsuit that it submitted false claims to Medicaid in violation of the False Claims Act. Specifically, the whistleblower claimed that CRC knowingly billed Medicaid for substance abuse treatment that was either not provided or for treatment that was not provided by properly qualified and licensed personnel.

CRC is the owner and operator of a residential substance abuse treatment facility in Burns, Tennessee called New Life Lodge (“New Life”). In 2011, Angie Cederoth, a former New Life employee, filed a whistleblower complaint under the qui tam provisions of the False Claims Act.

The False Claims Act permits private individuals to file qui tam lawsuits on behalf of the government against individuals or entities that may be committing fraud against the government. The individual who pursues the action, called a relator, is typically entitled to a percentage of any monies recovered by the government as a reward.

In the whistleblower’s complaint, she alleged that, from 2006 to 2012, New Life submitted claims to Medicaid for substance abuse treatment services that were either not provided or were provided by individuals who were not properly licensed therapists in the State of Tennessee.

In addition, the government alleged that New Life violated Tennessee state regulations by not having a licensed psychiatrist available to patients, by exceeding the Tennessee Department of Mental Health patient-staff ratios, by billing for Tennessee Medicaid patients in excess of New Life’s state-licensed bed capacity, and for allegedly double-billing Medicaid for prescription medications given to patients at the facility.

Medicaid is a health care program for individuals and families who meet specific low income criteria. It is jointly funded by federal and state governments, and managed by the states. CRC has agreed to pay $9.25 million to the federal government and the State of Tennessee Medicaid program to settle the whistleblower’s allegations.
The whistleblower will receive approximately $1.5 million as her reward under the qui tam provisions of the False Claims Act.

To read more about the types of government fraud that may violate the False Claims Act, click here.