Questionable Practices Involved in the Drug Rehab Business

On Behalf of | Apr 6, 2018 | Medical Malpractice


Drug overdoses in the U.S. are killing more Americans than automobile accidents.

There are an estimated 23 million addicts in the U.S. The need for addiction treatment is strong, and many in the industry have found it quite lucrative, as private health insurance does cover treatment for roughly 4 million people. Private insurance providers saw their spending on treatment of opioid addiction rise over 1,000% between 2010 and 2015, at an estimated expense of $721 million.

According to Robert Poznanovich, a director with the Hazelden Betty Ford Foundation in Los Angeles, many organizations tout their ability to cure addiction, but provide very little proof…or positive outcomes.

Drug Rehab Is a Big-Money Business

American Addiction Centers operates multiple U.S. treatment centers. On the New York Stock Exchange, their shares recently became available and are now worth an estimated $202 million.

In 2008 and 2010, various insurance laws encouraged for-profit businesses to enter the market to provide addiction treatment, which prior to this was serviced primarily by nonprofit and charitable organizations. The industry has risen to total estimated levels of $35 billion.

The nation’s opioid crisis has created an environment of dishonesty and insurance fraud. Many organizations have been accused of billing insurers for unneeded testing and procedures. The companies specifically seek addicts with good private insurance, and often pay for referrals from brokers.

Example: Dillon Katz

Dillon Katz, of Boynton Beach, Florida, and his mother, Staci, have had plenty of exposure to the rehab industry. After five years of Dillon going from one center to another, Staci had several binders filled with the medical expenses, which exceed $600,000. One facility charged $9,500 for five urine screens.

Both state and local authorities have been investigating rehab providers in Florida, and the Palm Beach County Sober Home Task Force arrested over 30 people involved. Eric Snyder, owner of a facility in Delray Beach, was arrested; he is now accused of fraudulently billing over $50 million and recruiting clients using gift cards, trips to strip clubs, and more.

Rehab Can Go Wrong: the Tragedy of Gary Benefield

Gary Benefield was a retired utility worker who drank and smoked despite requiring oxygen to breathe. He and his wife spoke with a representative with A Better Tomorrow, a drug addiction treatment center in California, and he agreed to enter inpatient care. When a driver picked him up at the San Diego Airport, Benefield was having difficulty breathing. The driver gave him a sedative left behind from another patient and brought him to the facility. Later that day, Benefield’s oxygen had yet to be filled, and though staff had to assist him after falling out of his bed, they did not restore his oxygen. In the morning, he was found dead, and his wife filed a lawsuit against the company, which later settled for an undisclosed amount. The State of California went one step further and filed murder charges, the first ever filed against a company. According to the LA Times:

“The prosecutor has argued that the company, in its drive for profit, accepted a client it was not prepared to care for and killed him by failing to refill his oxygen and allowing employees with little or no medical training to give him drugs that made it harder for him to breathe. Benefield was the fourth person to die after checking into the facility in a little over two years.”

Southern California has a high number of addiction treatment facilities and is called the “Rehab Riviera” by many. With the growth of the opioid epidemic and insurer mandates added by the Affordable Care Act, providers have surfaced quickly. These rehab centers attract addicts nationwide, often using questionable incentives. California had maintained a “hands-off” approach that allowed these providers make a huge profit-with little regard for treatment outcomes. However, state senator Pat Bates has endorsed legislation to stop “patient brokering” and other unscrupulous activity.

Federal Efforts to Fix Drug Rehab

Insurance fraud in the drug rehab industry has gotten the government’s attention. Reports continue to surface about the predatory nature of these businesses, which receive monthly reimbursements from private insurers often near $30,000. But it’s not all easy sailing. In 2016, the Senate was unable to pass a bill allowing local governments to implement care and safety standards in these facilities. Meanwhile, the House Committee on Energy and Commerce is still working to combat “patient brokering.” Attorney General Jeff Sessions has expressed his desire to begin enforcement, and was involved in the arrests in south Florida.

In the private sector, Google temporarily suspended advertising for rehabilitation and addiction providers. The company explained that some methods of recruitment-like finders’ fees-were taking advantage of those in vulnerable positions.

These drug rehab centers are full of people at their most helpless, who are easy to exploit. If you or a family member suffered physical or emotional harm at the hands of staff members-for example, medication errors that caused serious injury-please contact our attorneys at Norton & Spencer, P.C., at (816) 607-4750. We can examine your case in a free consultation and let you know how we can help you.


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