Politics Magazine

Calif. Crackdown on Rehab Fraud Misses Clinics with Troubling Audits

Posted on the 26 February 2014 by Jim Winburn @civicbeebuzz

0113_reposts_fraud_w100_res72 LOS ANGELES – Life Health Services, a drug rehabilitation clinic in South Los Angeles, took a big hit last fall when state health officials cut its funding and launched a fraud investigation. The clinic had been cited in government audits for client records that appeared to be falsified.

But in a brick office building on the same block, the U-Turn Alcohol & Drug Education Program continues to reap taxpayer money – despite the same kind of violations flagged in its audits.

State regulators have frozen funding to scores of clinics since The Center for Investigative Reporting and CNN uncovered rampant fraud in Drug Medi-Cal, part of the nation’s biggest Medicaid system. The crackdown has hit 88 clinics with 135 satellite sites – including half of Los Angeles County’s centers.

Still, a CIR analysis indicates that about a dozen clinics with similar track records remain open in L.A. County. CIR obtained the names of suspended clinics from sources after months of state refusals to provide the information and compared them with past government audits.

State officials won’t disclose how they chose the clinics they penalized, but they say they aren’t done yet.

“We are uncovering things all the time and working through them,” said Toby Douglas, director of the Department of Health Care Services. “There will continue to be more audits and more actions taken.”

An agency spokesman said some clinics require multiple audits before the state can determine whether to pull funding. In late January, the state suspended six more in L.A. County.

One that remained open until then was The Solutions Alcohol & Drug Recovery Foundation. While operating for six months after the first wave of clinic suspensions, it collected more than $700,000 in state and federal money.

Yet the South L.A. clinic had been exploiting the system for years, according to interviews with 10 former employees. The ex-staffers described routine forgery and said clients were instructed using literature by Church of Scientology founder L. Ron Hubbard.

“I don’t think they should have continued,” said former counselor Cleo Thomas. “They’re not helping anyone.”

Calls to clinic CEO Michael Hudspeth were not returned.

The Rehab Racket investigation highlighted how poor communication between state and L.A. County regulators helped enable fraud to flourish. Since then, the state and county have announced reforms to improve coordination.

If state regulators had reviewed county audits earlier, they would have seen telling signs of trouble at clinics that so far have avoided repercussions – the kinds of transgressions that the CIR/CNN investigation found all too common in a drug rehab system intended to help the poor.

Full story by Will Evans at cironline.org.

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