Princess, Here is one example, this is shameful.

California rehab clinics bill taxpayers for fake clients, addictions



Jul 29, 2013

Will Evans
Government Oversight Reporter

Christina Jewett
Health and Welfare Reporter


Victoria Byers did not drink alcohol. She did not abuse drugs. But when she was a teenager in foster care, several times a month, she would board a van at her group home and go to rehab.

Byers couldn’t figure out why she had to take drug tests and sit in group therapy sessions on addiction at So Cal Health Services, a clinic tucked in an office park in Riverside, Calif.

“And I told them, you know, ‘Why should I be here? I have no drug issue,’ ” said Byers, now a slow-to-smile 22-year-old.

The director of Byers’ group home confirmed Byers was clean but said she sent all six girls under her care to the clinic because she didn’t have enough staff to separate those with substance abuse problems.

The arrangement was strange. It was also a scam.

So Cal Health Services was ripping off taxpayers, part of a pattern of fraud by rehabilitation clinics that collect government funding to help the poor and addicted, a yearlong investigation by The Center for Investigative Reporting and CNN has found. The investigation, which included undercover surveillance and stakeouts, uncovered a rehab racket that continues to this day.

Thousands of pages of government records and dozens of interviews with counselors, patients and regulators reveal a widespread scheme to bilk the state’s Medicaid system, the nation’s largest. Witnesses to the fraud laid out its inner workings in minute detail, some speaking of it publicly for the first time.

In the underbelly of the Drug Medi-Cal program, clinics pad client rolls by diagnosing people like Byers with addictions they don’t have. They round up mentally ill residents from board-and-care homes to sit in therapy sessions they can’t follow. They lure patients in from the street by handing out cash, cigarettes and snacks. They have patients sign in for days they aren’t there.

One Inglewood clinic fabricated notes and billed for “ghost clients” who never came in. They couldn’t show up, a counselor discovered: Some were behind bars; one was dead.

Even caught red-handed, operators have polished techniques to ward off official scrutiny and keep the money flowing. One Los Angeles County clinic director lodged a complaint against a government auditor, and another called on a local lawmaker for help. In both cases, it worked.

The populous Los Angeles region is one of the nation’s top hot spots for health care fraud, and former state officials agree it is also ground zero for the rehab racket.

Drug Medi-Cal paid out $94 million in the past two fiscal years to 56 clinics in Southern California that have shown signs of deception or questionable billing practices, representing half of all public funding to the program, CIR and CNN found. Over the past six years, more than half a billion dollars have poured into the program statewide.

Following a year of public records requests and questions from CIR and CNN, state regulators announced a crackdown in mid-July. The action came two and a half weeks after reporters submitted a final list of their findings.

The state Department of Health Care Services temporarily suspended 16 clinics suspected of flouting the law and pledged to tighten oversight. Officials would not identify the targeted clinics, saying the information would compromise the investigation.

But veteran operators have become adept at sidestepping trouble.

Among them was Tim Ejindu, who ran the clinic where Byers was sent.

Nearly one-third of the foster children who showed up at Ejindu’s clinics in Riverside and Pomona had no drug or alcohol problem, estimated TaMara Shearer, a former addict who worked as a supervisor.

“Any loopholes, he knows how to find them. I’ve watched him do it,” Shearer said. “He thinks Americans are dumb.”

Under pressure to diagnose teenagers with fake addictions, counselors at the clinics reverted to racial stereotypes, according to Shearer. They labeled white teens as alcohol drinkers and black or Latino teens as marijuana smokers, she said.

Ejindu did not respond to an interview request or a letter outlining allegations against him. When contacted by reporters at his clinic, he declined to answer questions, closing the clinic door and refusing to reopen it.

Joy Jarfors, a manager with the state Department of Alcohol and Drug Programs until she retired in 2010, said “fraud and abuse (are) rampant” in the system.


Joy Jarfors, a former manager with the California Department of Alcohol and Drug Programs, says “fraud and abuse (are) rampant” in taxpayer-funded drug rehab.

I’m not the employee anymore that has to look at this every day, but I’m a taxpayer that knows that this is going on,” Jarfors said. “It angers me. And there’s story after story after story about Medicaid dollars being cut from people who need the services.”

The cost of failing to treat addicts is high. Drug overdose and excessive alcohol consumption are among the top causes of premature death in Los Angeles County, killing two people nearly every day. Statewide, the Legislative Analyst’s Office has found taxpayers spend more than $1 billion a year on hospital stays related to substance abuse for those on Medi-Cal.

The rehab centers promise a chance to start over in their very names, which include phrases like “new hope,” “new beginning,” “renew” and “U-turn.” But they don’t always deliver.

Vredette Hawkins was one woman who could have used some help. The South Los Angeles mother of four smoked marijuana and was under scrutiny from child welfare officials, she said, after someone accused her of using methamphetamine.

She went to a nearby Drug Medi-Cal clinic a year ago to get counseling for depression. She encountered a chaotic free-for-all, a clinic filled with people who came only because they wanted money.

At Basen Inc., clients received $5 each time they showed up, she said. Hawkins said counselors often abandoned group therapy sessions after 15 minutes, leaving clients to chat about sexual exploits and getting high. Two former Basen employees also told CIR that the clinic paid clients, although one said that the practice stopped amid worries about getting caught.

A county investigation last year found “extremely serious violations,” such as falsified paperwork, but couldn’t substantiate allegations that Basen was paying clients.

“The only one that’s basically benefiting from all this,” Hawkins said, “is … the person that’s running the program.”

Bassey Enun-Abara, the counseling center’s executive director, said he does not pay clients and disputed Hawkins’ description of the clinic. “I can’t believe a client would tell you that,” he said.

As director of the state Department of Health Care Services, Toby Douglas has primary responsibility for Medi-Cal, including the rehab system. Douglas, appointed by Gov. Jerry Brown in 2011, declined repeated interview requests.

Douglas’ boss, Secretary Diana Dooley of California’s Health and Human Services Agency, also declined interview requests. Approached by CNN in June outside a public meeting in Sacramento, Dooley headed for a restroom, which was locked.

She then said: “The state of California takes fraud very seriously, and there are many investigations that are underway. The allegations – all allegations are given full and fair consideration.”

Dooley added that her agency’s fraud and investigation unit is “one of the best in the country.” She ended the brief conversation with, “That’s all I have to say.”

Asked again whether Douglas would sit down for an interview, as she stepped into an elevator, Dooley put her hand over CNN’s camera and called for security. Later, her spokesman offered a sit-down interview with Douglas if CNN discarded the footage of Dooley. CNN and CIR would not agree to that condition.

A month later, Douglas announced his crackdown.

The agency’s chief deputy director, Karen Johnson, declined to discuss accusations about specific clinics and acknowledged that the state does not yet “know the expanse of the problem.”

Unreachable clients

Addiction counselor Tamara Askew discovered something wrong soon after she started working at Pride Health Services in Inglewood, southwest of downtown L.A., in 2009.

Addiction counselor Tamara Askew says that when she worked at Pride Health Services, her clients included people in jail and one who was dead.

Askew grabbed a stack of files and began contacting patients to introduce herself. That was harder than she had figured.

Some were in jail, Askew said. Several never showed up. One man she reached out to was dead.

“After that, it was like, ‘Are you kidding me?’ ” Askew said in an interview. “God rest his soul but, I’m like, ‘How are you billing (for him)?’ ”

When it came time to bill Drug Medi-Cal for services rendered, Askew said her boss, Godfrey Nwogene, wanted her to submit paperwork showing that all of those clients, living and dead, had been attending counseling sessions.

The more clients Pride Health Services reported treating, the more money it could charge the government.

“He basically said, ‘How do you think you’re going to get paid?’ ” Askew said.

When Askew would not sign off on billing for clients she hadn’t seen, her boss unplugged her computer, she said, and told her to leave.

Askew sued Pride, claiming she was fired for refusing to falsify records. Pride Health Services contended in court filings that Askew was laid off because there wasn’t enough work. Askew and Pride eventually settled, and a judge ordered the clinic to pay her $15,500.

Pride Health Services Executive Director Godfrey Nwogene, shown in a mug shot from an unrelated arrest in 2003, appealed to a Los Angeles County politician for help after allegations of billing fraud at his rehabilitation clinic. Pride has continued receiving public funds.

The clinic kept reaping more than $800,000 annually in government funding, despite persistent allegations of fraud and serious violations documented by auditors.

This year, a whistle-blower told Los Angeles County officials that Nwogene still was billing for “ghost clients.” When confronted by county regulators, Nwogene and his staff denied wrongdoing.

Without hard evidence, auditors couldn’t substantiate the allegations. They might have had more luck if they had visited Pride on a Wednesday.

Inside Pride’s Inglewood clinic, between a dairy mart and a gas station on busy Crenshaw Boulevard, a small lobby was empty April 3, save for artificial plants and a 1990s-era anti-alcohol poster.

A receptionist told reporters there were no counseling sessions that day.

The office offered no group therapy on Wednesdays, she specified, in an exchange caught on a video camera hidden in a watch.

Yet billing records obtained by CIR and CNN show that Pride Health Services charged taxpayers for counseling 60 people at the clinic that day, at a cost of about $1,600. The clinic was reimbursed for 62 patients the following Wednesday as well.

Nwogene, whose salary has reached as high as $120,000 a year, did not respond to requests for an interview or to a letter seeking responses to specific allegations. When reporters asked for him at Pride’s Inglewood clinic, a staffer denied wrongdoing. Workers then called police and closed the office mid-day.

Fake diagnoses among foster children

In California’s public drug rehab program, clients equal cash. State and federal taxpayer money flows to the local privately run clinics based on the number of people they serve. The counseling is free to those on Medi-Cal.

California spent nearly $186 million on the program in the past two fiscal years, according to figures from the Department of Health Care Services. That doesn’t include methadone clinics for heroin addicts, a separate wing of Drug Medi-Cal.

The state has the nation’s largest population of people who qualify for the benefit, a pool poised to grow sharply under the Affordable Care Act. But recent history suggests that expansion might shovel more funding to clinics that game the system.

A specialty of So Cal Health Services, the Riverside clinic to which Victoria Byers was sent, was diagnosing foster children with fabricated drug and alcohol problems and billing taxpayers for the unneeded services, according to former employees and whistle-blower complaints.

The clinic billed Riverside County between $31 and $75 for each counseling session a child attended, documents show.

“You’d have to make up a summary of them trying this drug and make up scenarios of how they tried it, how they got it,” said Nadine Cornelius, a former counselor. “It was all lies.”

Cornelius tried making her group therapy sessions educational, she said during an interview at a diner near her San Bernardino County home. But eventually, she gave up. Instead, she said she let the teenagers play bingo and watch movies.

An anonymous whistle-blower told county officials that So Cal was paying group homes for “access” to the foster children. Byers’ group home director, Angelina Farmer, told CIR that wasn’t the case.

Riverside County cut So Cal Health Services’ contract in 2010 because so many of its clients had dropped out. That failure was easier to prove than the fake diagnoses of teenagers, according to Karen Kane, the county’s substance abuse program administrator.

Kane said her agency was especially concerned that a false addiction diagnosis could negatively affect the foster children later in life.

“Our goal was to stop them from harming people and get them out of the business – and that’s what we did,” Kane said.

By then, the county already had paid So Cal $1 million, dating back to mid-2007.