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“Unconscionable” – SoCal Sober Home Owners and Patient Recruiters’ Toxic Game

Date Published
Dec 23, 2021

December 23, 2021.  Patient headhunting has no place in the addiction recovery process.  As part of the Sober Homes Initiative in the past several months, the United States Department of Justice has pursued criminal charges against 10 addiction recovery facility owners and patient recruiters in Southern California.

According to the allegations, the kickback scheme at several substance abuse recovery facilities works like this: the facility owners pay kickbacks to patient recruiters for referrals to treatment facilities, recovery homes, or laboratories.  The recruiters’ compensation varies based on the patients’ insurance and the time the patients spend under care.  As the California Insurance Commissioner notes, “The suspects in this case specifically targeted vulnerable individuals in recovery and sold them as a commodity with no concern for their health or wellbeing.”  In some of the cases, according to the allegations, facilities paid between $500,000 to $2.7 million to recruiters in exchange for patient referrals.

Manipulating people suffering from addiction is akin to selling weapons to both sides in a war.  Profiting off human suffering benefits no one.  Paying patient recruiters a monthly fee for the time a patient spends in treatment does not incentivize recovery.  Insurers must increase premiums to account for fraud, waste, and abuse, which harms economically vulnerable subscribers.

Whistleblowers can report patient recruiting kickback schemes.  Reporting fraud against government healthcare programs may earn a whistleblower 15-25% of the government’s recovery.  Additionally, California has a whistleblower statute that addresses fraud committed against private insurers, the California Insurance Frauds Prevention Act, whereby individuals can sue fraudsters violating California insurance law.

As one of the Special Agents leading Operation Sober Homes said, “It is unconscionable when owners and operators of substance abuse facilities abuse the systems designed to help patients recover from addiction.”  Whistleblowers can break this cycle.

If you would like to report Medicare fraud, you can contact attorneys at Tycko & Zavareei LLP.  Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Eva was the Senior Counsel for Health Care Fraud. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Eva Gunasekera at [email protected] or contact Renée at [email protected] (tel.: 202-417-3664). Visit Tycko & Zavareei LLP’s website for whistleblowers to learn more at

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