Feds continue targeting alleged fraud in OC’s rehab industry [The Orange County Register]

The U.S. Department of Justice continues its crackdown on fraud in Orange County’s addiction treatment industry, arresting a “patient intake coordinator” on a federal grand jury indictment alleging he conspired to pay illegal kickbacks to “body brokers” in exchange for heads-in-beds, i.e., new patients.

Those patients would receive thousands of dollars for agreeing to enter treatment as well, according to the indictment.

Luis Guerrero, 53, of Santa Ana, was arrested on Thursday, May 23, and pleaded not guilty to one count of conspiracy and three counts of offering or paying for referrals. Trial was slated for July 16, and he was ordered released on $20,000 bond.

The feds didn’t identify the facility Guerrero worked for by name and called its manager “Co-conspirator 1,” suggesting the inquiry is ongoing. We found a Luis Guerrero who was program director at an Orange facility, but no one from that treatment center returned calls, emails or social media messages requesting comment on the arrest.

The alleged modus operandi is well-known by now: Treatment centers pay brokers to find patients with good health insurance, so the centers can rack up billings. Guerrero allegedly arranged for brokers to receive thousands of dollars in illegal kickbacks for each patient they referred. That money was meant to keep bodies coming so Guerrero could meet a “monthly patient intake quota” — a condition of his employment, the indictment said.

Guerrero also allegedly helped pay thousands of dollars directly to patients for their cooperation. During a call with one broker over an encrypted messaging service, Guerrero arranged to get a $5,000 electronic payment to a patient, saying, “We’ll do something to put money in her hands before she leaves or before she arrives [home],” the indictment said.

In October 2020, Guerrero allegedly negotiated a $37,000 payment to the brokers in exchange for five patients.

It all pencils out, if you don’t get caught.

Over 20 days in the fall of 2020, one patient’s health insurance provider was billed $83,475 for addiction treatment services — or some $4,174 per day, the indictment said. Over 18 days that fall, another patient’s insurer was billed $86,950, or $4,831 per day, it said.

Patients had health care benefits through Anthem Blue Cross and Cigna Health and Life Insurance, among others, the indictment said. The operation allegedly tried to cover its tracks with a “sham contract” that prohibited payments to brokers based on the volume or value of a broker’s referrals.

If convicted of all charges, Guerrero faces up to 35 years in federal prison. Assistant United States Attorneys Benjamin R. Barron and Nandor Kiss of the Santa Ana office are prosecuting this case, officials said.

The U.S. Department of Justice’s crackdown, dubbed “The Sober Home Initiative” and focused intensely on shenanigans in Southern California, has led to 14 indictments.

In April, Newport Beach resident Scott Raffa, 57, was arrested at LAX and charged with a dozen counts of “illegal remunerations for referrals to clinical treatment facilities” to the tune of some $175,000. He owned and operated Sober Partners Waterfront Recovery Center, Sober Partners Reef House and Sober Partners Beach House, according to his indictment. He has pleaded not guilty.

Just days earlier, Kevin M. Dickau, 35, of Tustin, pleaded guilty to conspiracy to commit health care fraud and was sentenced to 15 months in prison and three years of supervised release. He was part of a marketing effort that enticed “individuals addicted to heroin and other drugs” to enter rehabs, where the rehabs paid referral fees of $5,000 to $10,000 per patient.

Federal filings say Guerrero’s case may be related to those against Dorian Ballough and Kyle Reed, charged with conspiring to pay and offer kickbacks for addiction treatment services.

“The charges in those cases involving their serving as patient recruiters for certain clinical treatment facilities in Orange County,” a notice to the court said. “The charges in this case involves kickback payments to Ballough and Reed for patient referrals to a clinical treatment facility in Orange County, which were paid to them as part of the patient recruit business that they operated, and thus as part of the conspiracy charged against each of them in their respective cases.”

Can you imagine a cardiac or cancer clinic working this way?

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