Ex-CEO of Bucks County drug rehab center Liberation Way sentenced to 3 years for exploiting patients for profits

Philly.com

The cofounder and former CEO of a Bucks County drug rehab firm was sentenced to three years in federal prison Monday for spearheading a wide-ranging fraud scheme that made millions illegally profiting from the struggles of patients it had pledged to help.

Jason Gerner, who had emerged from his own crippling opioid dependence to launch Liberation Way in 2015, admitted last year that he accepted kickbacks from lab operators and illegally bought insurance for dozens of addicted patients so that he and his partners could profit from frequent, medically unnecessary and expensive drug screenings.

As he stood before U.S. District Judge Wendy Beetlestone at a sentencing hearing Monday, Gerner, 46, of Shamong, Burlington County, apologized for his crimes, while his attorney, Brian J. McMonagle, urged the court to consider all those who managed to beat their addictions thanks to the treatment they received through the company.

“Mr. Gerner is truly humbled by his failures,” McMonagle said in court papers in the run-up to the proceedings. “He has accepted complete responsibility for his crimes and done everything in his power to remedy the harm he has caused.”

That includes already paying more than a third of the roughly $9.3 million in court-ordered restitution and agreeing to forfeit an additional $445,000, the lawyer said.

Beetlestone appeared swayed by those arguments as well as Gerner’s decision to plead guilty last year to charges of conspiracy to commit health care fraud and money laundering and to cooperate with prosecutions against others in the company.

The sentence she imposed -- which also included a three-year term of probation upon his release -- was more than two years less than Gerner could have faced under federal sentencing guidelines for his crimes.

From its launch in 2015, Liberation Way proved wildly successful. Averaging more than 80 new patients a month in a region wracked by an opioid epidemic that has killed thousands, it was making more than $23 million in gross revenue by 2017 at its treatment centers in Yardley, Bala Cynwyd and Fort Washington.

It fetched a $40 million payday for its owners and investors when the company was sold later that year to a private equity firm that kept Gerner on as CEO.

He and cofounder Dallas Fetterman cited their personal understanding of addiction due to their own past struggles with drugs as the key to their success. For Gerner, that came in the form of a decade-long addiction to heroin after he became hooked on painkillers while recovering from a neck injury during his days as a student at Drexel University.

But a damning statewide grand jury report last year painted the company in a much darker light, describing it as a “revolving door” that trapped patients suffering from addiction in a cycle of ineffective treatment and near inevitable relapse. Before its demise, the facilities had been cited by the state Department of Drug and Alcohol Programs for more violations than any other program in the state.

The report forced Liberation Way to shutter its doors and cell off sober homes it ran to house patients. State and federal prosecutors filed charges against Gerner, cofounder Branden Coluccio, and nine others, including the company’s former medical director, Domenick Braccia. (Fetterman died of a drug overdose in 2017.)

Gerner admitted last year that the company had actively recruited patients with premium insurance plans so it could maximize profits by billing carriers for high-cost, out-of-network reimbursement for treatment.

In some cases, Liberation Way even paid for health plans for clients without coverage, routing the money through sham charities with names like “Hope for Families” to skirt rules barring anyone but family members, religious organizations or legitimate nonprofits from covering the costs.

Patients whose insurance had been bought for them were required to live in “sober homes” rented and owned by Liberation Way. State grand jurors described them as breeding grounds for relapse, where those allegedly receiving treatment were poorly supervised and housing staff and employees engaged in sexual relationships with patients.

One in North Wales was even known among patients and staff as “the party house,” the grand jury said.

Their true purpose, U.S. Attorney William M. McSwain said in a statement Monday, was to ensure that clients living there would show up for frequent treatments including hundreds of unnecessary urine screening tests ordered by company doctors, who in many cases had never met the patients that they claimed to be treating.

“Those who think that they can game our health care system, which is already strained under the weight of an ongoing opioid epidemic, and prey upon vulnerable people will face the consequences,” he said.

Gerner has admitted receiving kickbacks as high as 40 percent from an associate at one chain of Florida urinalysis labs that billed insurance companies for millions due to Liberation Way’s frequent testing.

“Some patients were cycled through treatment at Liberation Way up to eight times,” the grand jury wrote in its presentment last year. “Once a patient’s benefits were exhausted, Liberation Way transferred the patient to another treatment center.”

Yet despite that approach to the business, several former Liberation Way patients urged the judge Monday to consider those the company did help overcome their addictions.

One, a woman from Mickleton, N.J., told the judge that the personal connections Gerner forged with patients had made all the difference in her recovery after failed past stints in rehabs in California, Florida and New Jersey.

“We were put in gorgeous homes, taken out to outings,” she wrote in a letter submitted to the court. “Jason always went the extra mile to make us know we were important and special. He gave us a sense of normalcy that you crave when you are in treatment.”

Her mother also wrote to the judge: “I was looking for a gravestone to buy my daughter before Liberation Way. Now, I am watching her live life as a strong, amazing, beautiful and sober woman.”

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