Addiction Treatment Firm Accused of Exploiting Addicts and Insurers

The Pennsylvania attorney general’s office charged the co-founder and former executives of an addiction treatment firm Monday and accused them of profiting off addicts by fraudulently billing insurance companies for tens of millions of dollars, with seemingly little regard for the welfare of the addicted person.

The charges announced by Attorney General Josh Shapiro against 11 people in Pennsylvania, New Jersey and Florida, and nine corporations revolve around Liberation Way, a for-profit treatment company with centers in suburban Philadelphia that was sold to a private equity firm in 2017 for nearly $42 million.

Shapiro said the two-year investigation found more than $44 million in profits from fraudulent schemes. In some cases, the addicted people returned again and again for treatment, leading to more and more fraudulent billing by Liberation Way, Shapiro said.

The attorney general’s office began investigating based on information it received from the state Department of Drug and Alcohol Programs, whose inspectors had flagged various violations at Liberation Way facilities.

The schemes include billing for substandard, nonexistent or unnecessary treatment, Shapiro said. State charges include dealing in proceeds of unlawful activities, criminal conspiracy, insurance fraud and identity theft. Federal conspiracy charges have also been filed.

A telephone message seeking comment was left at a number listed for Jason Gerner, a Liberation Way co-founder and one of the people charged. Court officials say no attorney is listed for him.

The private equity firm that bought the majority interest in Liberation Way, Fulcrum Equity Partners, absorbed Liberation Way’s treatment centers into a company called City Line Behavioral Health.

Fulcrum-owned entities last year sued Gerner and others who had sold stakes in Liberation Way, accusing them of failing to disclose violations and other activity that prompted the investigation. The Fulcrum entities won a settlement that City Line spokeswoman Missy Orlando said is confidential.

Two of the three former Liberation Way centers remain open, but with an overhaul of the treatment, programming and staff, Orlando said.

Authorities said one scheme at Liberation Way involved illegally signing up addicted people for insurance policies and then paying their insurance premiums in ways that hid the source of the money. That included cash, pre-paid Visa gift cards and bank accounts of two non-profit organizations created by Liberation Way’s owners, they said.

Shapiro also said the company got kickbacks from insurance coverage of unnecessary urine lab tests from a Florida firm and by warehousing addicts in poorly run and unlicensed inpatient facilities that it owned.

The schemes often inflicted suffering on the addicted people, Shapiro said.

If insurers didn’t pay lab fees in full for unnecessary urine tests, Liberation Way had the labs demand that patients and their families pay the outstanding balances, Shapiro said.

Meanwhile, one of the treatment homes was known as the “party house,” Shapiro said. Patients there were in “unsavory or even unsafe situations where the temptation to relapse was rampant,” authorities said.

Patients who relapsed would re-enter treatment at a higher level of care, and Liberation Way billed insurers for higher rates of reimbursement. Liberation Way cycled patients through the treatment process as many times as possible, even as many as eight times, authorities said.