Tennessee Substance Abuse Facility New Life Lodge Settles Allegations of Medicaid Fraud

In a recent settlement out of Tennessee, California-based CRC Health Group, Inc. has agreed to pay $9.25 million to settle allegations of Medicaid fraud involving one of its addiction treatment centers located in the city of Burns. The settlement is the result of a joint investigation by the Tennessee Attorney General’s Office and federal authorities, and will refund a large portion of the Medicaid funds wrongfully and fraudulently siphoned by the company. If you are aware of fraud involving your state-run Medicaid program, we encourage you to contact a whistleblower attorney as soon as possible.

Details of Case Against CRC Health Group, Inc.

CRC Health Group, Inc. is a California-based company that specializes in managing nearly 115 addiction, weight loss, and mental health centers across the United States. The whistleblower in this action is a former employee of the Burns “New Life Lodge” substance abuse center. According to the press release by the Tennessee Attorney General, New Life Lodge was consistently offering sub-standard care to patients while simultaneously overbilling Medicaid for addiction treatment services.

Specific allegations against New Life Lodge, which both it and CRC vehemently deny, reveal it was common practice at the facility to admit patients in excess of state capacity laws. In general, any facility receiving state funding must adhere to limitations set by health officials with regard to the number of patients the facility may accept. Admission in excess of the set capacity laws, and subsequent billing for patient services, may amount to a false claim and possible prosecution for Medicaid fraud.

In addition to its capacity troubles, New Life Lodge was also alleged to have double-billed the Tennessee Medicaid system (TennCare) by invoicing for prescriptions filled by a third-party pharmacy, notwithstanding the fact that these medications were already factored into the per diem payment amount provided by TennCare for the daily treatment of the substance abuse patients.

Other allegations include failure by New Life Lodge to provide patients with access to psychiatric services as required by law, failure to employ properly-licensed staff, and the provision of services that were not medically necessary for the treatment of substance abuse. New Life Lodge is also alleged to have refused to follow through with patients’ treatment plans, despite billing TennCare for services never rendered.

New Life Lodge Denies Allegations

Not surprisingly, New Life Lodge has denied the validity of these allegations and asserts its dedication to people seeking treatment for addiction. By contrast, the Tennessee Attorney General’s office asserts:

“New Life Lodge accepted millions of dollars of TennCare funds with the understanding that it would provide necessary substance abuse treatment services to some of the State’s most vulnerable citizens….Instead, far too often, those operating the facility failed to meet their obligations by falling short of minimum necessary standards of care or using third-party pharmacies to double-bill the program.”

Of the $9.25 million settlement amount, Tennessee is set to receive about $3.4 million. The whistleblower’s reward has not been disclosed at this time.

State authorities ordered a shutdown of New Life Lodge following public reports of sub-standard care. The site reopened in 2012 at an alleged reduced capacity and was only authorized to accept adult patients.

Contact Us to Learn More

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1. Fill out the contact form on this page.
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