American Greed

Opioids' hidden epidemic—fraudulent drug treatment centers

Fighting America’s fraudulent rehab epidemic
Fighting America’s fraudulent rehab epidemic

Thanks to the opioid epidemic, more Americans die from overdoses every year than in car accidents, and the federal government is scrambling to try to get in front of the crisis. The House just passed and sent to the Senate a sweeping, bipartisan package of legislation backed by dozens of advocacy groups.

Meanwhile, record numbers of patients are seeking treatment, with admissions to treatment facilities surging 600 percent between 1999 and 2008 alone, according to a study by the Centers for Disease Control and Prevention. And that has led to an explosion in the number of treatment facilities. While most are legitimate, critics say a patchwork system is allowing some operators to capitalize on the crisis, exploiting patients when they are most vulnerable.

“The system is set up in a way that allows individuals with really great skills with the internet, with the web, with call centers, to enter the field and actually set up treatment centers and prey on families and patients who need help in a way that would never be tolerated, never tolerated in the rest of health care,” said Mark Mishek, president and CEO of the Hazelden Betty Ford Foundation in Minnesota.

None was more brazen than Kenny Chatman, who ran a string of fraudulent treatment centers and “sober homes” in South Florida. But rather than helping patients get clean, Chatman’s facilities encouraged drug use, keeping patients in “treatment” as long as possible in order to collect insurance reimbursements to the tune of at least $16 million.

And when business got a little slow, drug-addicted patients were ordered to provide urine samples for fictitious patients in order to keep the money coming in. Some of the “clinics” even became fronts for prostitution.

“Kenny Chatman saw an opportunity, saw a chance to make a lot of money, and didn’t care who he hurt to make that happen,” Marie Villafana, an assistant U.S. attorney, said in an interview with CNBC’s "American Greed."

That includes addicts and their families. Michelle Curran’s 20-year-old daughter, Mikaya, had been receiving treatment for her addiction to painkillers at a legitimate facility until one of Chatman’s centers lured her away. There, she relapsed. Eventually evicted from the facility, she shot up some bad heroin, overdosed and died last summer. She was 24 and left two toddler sons.

“We received a call from the Boynton Police Department, and I knew,” Michelle Curran told "American Greed." “I remember it like it was last night. It’s hard because you don’t ever want to hear that your child is gone.”

Chatman pleaded guilty last year to federal charges of health-care fraud, money laundering and human trafficking. He is serving a 27-year prison sentence.

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A broken system

The case led to a crackdown on sober homes in Florida, with some 200 facilities shut down and 50 people arrested. But Mishek says the effort barely scratches the surface of what he says is a broken system nationwide.

“It’s really not a comprehensive system. It’s characterized by a variety of state laws, different levels of regulation, different levels of certification, kind of a lack of agreement in many cases on the right clinical standard for certain substance use disorders,” he told "American Greed." “So, there’s a lot of work to be done."

He says one of the biggest problems is that regulators and insurers fail to recognize addiction as the chronic disease it is, focusing instead on short-term measures.

“It’s a disease that needs to be managed over a person’s lifetime,” he said. “So, the system we have today, for example, may provide insurance coverage for a short residential stay or for an outpatient program. That’s not enough. Patients and their families need to be involved in recovery for many, many weeks if not months and years in order to get well."

Last fall, President Donald Trump declared the opioid crisis a national health emergency. In March, he vowed to “liberate” the nation from the crisis, threatening to sue drug companies, and even seeking the death penalty more frequently for drug dealers. The federal budget deal approved this year includes $4.6 billion to fight the crisis. The new legislation — which some say does not go far enough — includes reforms in Medicaid and public health systems aimed at curbing addiction.

Mishek says all of that is positive, but only a start.

“Is it enough? No, I mean only 1 out of 10 people who need treatment actually get treatment,” he said.

Buyer beware

While there are still no national standards for recovery centers and no national certification, 27 state agencies have adopted standards created by the National Alliance for Recovery Residences. The standards establish various levels of care, as well as procedures to monitor quality, and a patients bill of rights. Many states are considering requiring facilities to adopt the NARR standards.

“That’s what needs to happen so that consumers can have some kind of stamp of approval when they go look for a sober home,” Mishek said.

For now, the burden is on patients and their families to choose the best course.

“If there’s ever an area where ‘let the buyer beware,’ this is one,” Mishek said. “It’s really important that a family, and typically it’s a family who’s making a purchasing decision for a young adult, that they spend a lot of time finding out what they’re going to do.”

That includes visiting the facility beforehand, and even asking around the neighborhood to determine if the clinic is a good neighbor. And, he says, beware of facilities offering any type of treatment for free.

“Usually that means there’s something going on under the table, some sort of kickback or some sort of fee being paid from the treatment program to the sober house or vice versa,” Mishek said.

Addiction is devastating enough for patients and their families without also having to worry about unscrupulous profiteers. But unfortunately, there are plenty more where Chatman came from.

See how crooked clinic kingpin Kenny Chatman turned desperation into dollars, on an ALL NEW episode of "American Greed," Monday, July 2, at 10pm ET/PT only on CNBC.