CRC Health: Acadia’s West Virginia Centers and the Lab Work They Claimed

Acadia agreed to pay $17 million to resolve laboratory rebilling allegations in the CRC Health fraud case involving Acadia’s West Virginia treatment centers. According to the government, the seven outpatient centers held certificates for simple tests. The government alleged that they sent the more complex work to San Diego Reference Laboratory, then billed as though they had performed it themselves. An insider who knew where the samples went could see a different story from the one Medicaid received.

The U.S. Attorney’s Office for the Southern District of West Virginia announced the settlement on May 6, 2019. Acadia Healthcare Company operated the centers through its subsidiary, CRC Health.

Waived-Test Certificates and Complex Lab Claims

The government’s announcement described the centers’ authority as limited to waived laboratory tests: simple tests with a low risk of an incorrect result. The Centers for Medicare and Medicaid Services certified each center for that level of testing only. Moderate- and high-complexity testing required a substantially higher level of certification.

That distinction mattered to the Medicaid bill. According to the government’s account, West Virginia Medicaid rules prohibited these centers from seeking reimbursement for moderate- and high-complexity urine and blood testing they lacked certification to perform and had not performed.

The government alleged that, at the centers’ request, San Diego Reference Laboratory performed the complex tests and invoiced them. The centers paid the laboratory directly, then claimed its work as their own.

We see the absurdity in that account: a center could pay an outside laboratory for its work and then ask Medicaid to pay as though that same work had happened inside the center. The laboratory invoice recorded one provider’s work. The Medicaid claim allegedly credited another.

The person who knows which tests leave the building can explain something a claim line conceals.

West Virginia Treatment Centers Sent the Complex Tests Out

The government’s account placed the centers in Charleston, Huntington, Parkersburg, Beckley, Williamson, Clarksburg and Wheeling. They provided outpatient drug treatment, including administering methadone and prescribing Suboxone and Subutex.

The government identified the laboratory-billing conduct as running from January 1, 2012 through July 31, 2018. Its allegations concerned the urine and blood testing sent to the outside laboratory during that period.

Acadia’s separate 2024 inpatient-care settlement concerned allegations including unnecessary admissions, extended stays and missing active treatment. The West Virginia case centered on outpatient laboratory claims. The company name connects the cases, but the work billed and the allegations are different.

The Alleged Gain: Medicaid Paid More Than the Outside Lab Charged

The government alleged that Medicaid paid the centers substantially more for the complex tests than San Diego Reference Laboratory charged them. That payment difference explains the financial attraction of the arrangement. The centers allegedly collected the higher reimbursement while paying the outside laboratory’s lower invoice.

The announcement put the resulting Medicaid payments and loss at $8.5 million. It described the settlement as twice that loss.

Nearly $2.2 million of the settlement was to go directly to West Virginia. Medicaid’s funding came from both the state and federal governments, so the alleged billing drew on both.

For an insider, the practical connection is between the laboratory charge and the reimbursement for the same testing. Accounts payable can show what the center bought from the laboratory. Billing records can show what the center represented to Medicaid.

The money also gives the certification issue its weight. The government alleged that the program paid the centers for work their certificates did not authorize them to perform. The cost fell on public funds intended to pay for health care, including addiction treatment.

Compliance Reviews After the Settlement

The resolution required Acadia and CRC to enter a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. The Justice Department said the agreement required a compliance program, a risk assessment program and an independent organization to review Medicaid claims.

The HHS Office of Inspector General, the Drug Enforcement Administration and the West Virginia Department of Health and Human Resources’ Medicaid Fraud Control Unit conducted the investigation as members of the U.S. Attorney’s Healthcare Fraud Abuse, Recovery and Response Team.

When the Laboratory Bills for the Treatment Center’s Orders

The separate Edgewater Recovery Center case concerned government allegations that Thoroughbred Diagnostics billed Medicare and Kentucky Medicaid for tests it knew typically went unused in patient care, a different issue from the West Virginia centers’ alleged rebilling of an outside laboratory’s work.

What Evidence Is Needed to Prove Fraud?

For laboratory rebilling, the useful evidence connects the center’s testing authority, the work the laboratory actually performed and what Medicaid paid. Our whistleblower experts examine that connection with the insider who understands how specimens, results, invoices and claims moved through the business.

In the West Virginia allegations, the center’s direct payment to the laboratory connected the purchased service to its subsequent Medicaid claim for that work.

Different jobs give different views of that connection. Someone handling laboratory invoices may know exactly which services the center purchased. A billing employee may know how those services appeared on claims. A compliance employee may know how the center’s certificate was understood inside the organization. We work with that operational knowledge to understand the alleged mismatch and who directed it.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Where the Testing Went

If you worked with the specimens, laboratory invoices or Medicaid claims and saw the work attributed to the wrong provider, tell our whistleblower experts what you saw. We build the case with you and bring in healthcare fraud whistleblower lawyers who understand treatment-center billing and laboratory claims. We stay beside you throughout the case, turning your knowledge of the operation into your strongest treatment-center whistleblower case.