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California Lawmaker to Hold Hearing on Fraud in Taxpayer-Funded Rehab Clinics


The chairman of the California Assembly Health Committee announced he will examine the issue of fraud in taxpayer-funded drug rehab clinics, during a hearing on the state’s Medicaid program. The problems in the clinics were uncovered through an investigation by CNN and The Center for Investigative Reporting.

“A lot of people seemed to know what was going on, but for some reason they didn’t seem to be acting on what was going on,” Dr. Richard Pan said in a news release. “It seemed like it was hiding in plain sight.” The hearing is scheduled for September, CNN reports.

The investigation uncovered fraud by California rehab clinics that receive government funds to assist clients who are poor and addicted.

According to CNN, these clinics diagnose people with addictions they don’t have, so they can increase client rolls. The clinics recruit mentally ill residents from group homes to attend therapy sessions. They attract patients from the street through incentives of cash, food and cigarettes, and have them sign in for days they do not attend sessions. One clinic billed for clients who could not have attended sessions, either because they were in jail or dead.

The state’s Drug Medi-Cal program paid $94 million in the past two fiscal years to 56 Southern California clinics that CNN says showed signs of deceptive or questionable billing practices. This represents half of all public funding to the program. The findings come from a review of government records and interviews with counselors, patients and regulators.

Earlier this month, the California Department of Health Care Services announced an investigation of 16 substance abuse treatment centers for patients on Medi-Cal, the state’s insurance plan for people on welfare and other low-income residents. The centers are suspected of fraud and hiring providers who have felonies on their records.

2 Responses to this article

  1. Avatar of COUNSELOR I I
    COUNSELOR I I / August 9, 2013 at 2:23 am

    I worked a some rehabs that were seriously unethical, after reporting my concerns to their HR department, they fired me. These types of businesses are as diseased as the addictions that they try to treat. I will be following the states ‘dragnet’ investigations, if any of the places that I worked for pass, I will know that the state either did a sloppy investigation or overlooked the problems. I know where to find the evidence, so there is no reason that the state should not be able to find it as well.

  2. Avatar of jj
    jj / August 5, 2013 at 12:52 pm

    It is about time. It is past time. Policy makers have good intentions, but something is so drastically wrong with the system that these bottom feeders can get away with such abuse. There needs to be a better connect between state government agencies and policy makers (here and other places) that produces sound fiduciary responsibility. And I would anticipate that those bottom-feeders stealing the funds from the government will get little more than a slap on the hand, and laugh all the way to the bank (at the cost of taxpayers). Argh.

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