"American Greed" Tackles Crackdown On Recovery Industry Fraud

By now you’ve likely heard of the Kenny Chatman story. He is perhaps the most nefarious of all sober living home operators, who used his business to sabotage clients’ recovery so he could continue collecting insurance payments, even using it as a front for prostitution.

His high-profile case shed a harsh light on fraud and the lack of regulation in the recovery industry, and spurred several reforms since.

“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,” assistant U.S. attorney Maria Villafana said on American Greed, the CNBC series which featured Chatman’s story on Monday, July 2.

Chatman’s South Florida facilities encouraged, rather than prohibited, drug use to perpetuate the cycle of “treatment” and keep millions of dollars’ worth of insurance payments coming in.

Last May, Chatman was sentenced to 27 years in prison after pleading guilty to health care fraud, money laundering, and human trafficking. His case led to 50 arrests and the shutdown of about 200 facilities.

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The recovery industry is “really not a comprehensive system” that lacks a standard for treating substance use disorders, said Mark Mishek, president and CEO of the Hazelden Betty Ford Foundation. Insurers and regulators tend to focus on the short term, which is a big problem for people seeking recovery.

“It’s a disease that needs to be managed over a person’s lifetime. So, the system we have today, for example, may provide insurance coverage for a short residential stay or for an outpatient program,” said Mishek. “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 July, Florida enacted a law that established tighter rules and penalties on sober living homes that scam clients and falsely advertise their services. It also mandates background checks for any owners, directors, and clinical supervisors at treatment centers.

And last month, the U.S. House of Representatives passed legislation that would increase coverage for the treatment of substance use disorder under Medicaid, and would expand the use of medication like methadone for treating substance use disorder.

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