CRC Health / New Life Lodge: Cots in the Hallway, Licensed Beds on the Bill

In the CRC Health New Life Lodge fraud case, CRC agreed to pay $9.25 million to the United States and Tennessee over allegations of false Medicaid billing for addiction treatment between 2006 and 2012. The government alleged missing therapy, improperly licensed therapists and patients billed beyond the facility’s licensed bed capacity. The whistleblower’s complaint put that last allegation in ordinary terms: patients on hallway cots and sofas, represented to the payer as patients in licensed beds.

CRC Health Corporation operated New Life Lodge, a residential substance abuse treatment facility in Burns, Tennessee, serving adults and adolescents. A former employee in its billing department brought the False Claims Act case. Her complaint described a treatment operation in which the authorization, the care and the bill allegedly told different stories.

What New Life Lodge Allegedly Billed TennCare For

The Justice Department’s April 16, 2014 settlement announcement alleged that New Life Lodge billed TennCare, Tennessee’s Medicaid program, for substance abuse therapy that patients never received or that improperly licensed therapists provided.

The government’s allegations covered the treatment operation as well as individual sessions. New Life Lodge allegedly failed to make a licensed psychiatrist available as state regulations required and failed to maintain required patient-staffing ratios. It also allegedly billed for Medicaid patients beyond its state-licensed bed capacity and caused Medicaid to be charged twice for prescription substance abuse medications given to residents.

The complaint shows how several of those differences could disappear by the time a claim reached the payer.

When Authorization Became the Bill

The whistleblower alleged that New Life Lodge billed according to the treatment authorized, even when the care actually delivered was different. The complaint described claims sent to TennCare’s health plans, with an executive’s instruction at the center of the practice:

United States ex rel. Cederoth v. CRC Health Corporation, Inc., whistleblower’s complaint, paragraph 41

The complaint gave a specific example. A patient could be authorized for five days of detoxification but moved to rehabilitation after three days. New Life Lodge would allegedly bill for the full authorized detoxification period anyway. In that example, the patient received care, but the treatment changed and the billing did not.

The complaint also alleged that New Life Lodge was licensed only for subacute care but sought payment for patients who needed acute care. Detoxification brought the facility its highest compensation, according to the complaint, and it allegedly certified those patients as needing subacute detoxification.

The whistleblower also alleged billing after discharge. When a patient left early against medical advice with additional days still authorized, the facility allegedly claimed the entire certified period. The authorization remained useful for billing after the patient had gone.

Licensed Counseling Without Licensed Counselors

The complaint alleged that New Life Lodge certified a rehabilitation program with clinical counseling by licensed counselors, then supplied unlicensed technicians or no counseling at all. That makes the person delivering the service part of the billing allegation. A counseling entry could conceal both whether the session happened and whether the person providing it had the qualification represented.

The whistleblower also alleged that the adolescent program’s director claimed a master’s degree but held only a high school diploma. The alleged credential problem reached the person directing the program, alongside the staff delivering its care.

The complaint also described the billing employee seeing sick patients on the floor outside the medical office and asking a nurse to help. The nurse allegedly refused to provide care, and the employee was told that it was not medication time and that she should concern herself only with paying bills. The employee’s account connected what she saw in the facility with the billing work she was supposed to do.

A billing employee and a clinician could see different parts of the same false claim: the service charged to TennCare and the people available to deliver it.

Patients Beyond Licensed Bed Capacity

The bed-capacity allegation concerned patients allegedly billed as occupying licensed beds while sleeping on hallway cots or sofas. The whistleblower’s account made the mismatch physical: where the patient slept versus what the facility certified to TennCare and its plans.

The complaint then described an effort to keep auditors from seeing that mismatch:

United States ex rel. Cederoth v. CRC Health Corporation, Inc., whistleblower’s complaint, paragraph 47

An Offsite House Billed as Facility Treatment

New Life Lodge’s Extended Care program allegedly operated at an offsite property while TennCare and its plans were led to believe services occurred at the treatment facility. The whistleblower described the property as a halfway house without a license to provide healthcare or rehabilitation services. She alleged that the care did not meet the requirements for the level New Life Lodge billed.

In this complaint, the alleged substitution was an offsite house for the facility-based treatment represented in the claim.

For someone who worked in admissions or treatment, where patients actually went could explain something the bill alone concealed. The same is true of the hallway cots: a staff member’s ordinary knowledge of the premises could connect the claim to the care environment behind it.

Staffing Shortfalls Can Reach the Claim

The CRC allegations described bills for treatment without the staff or qualifications that treatment required.

A later addiction-treatment case illustrates the same connection. In its settlement with Journey to Hope Health and Healing, the government alleged that opioid-treatment claims lacked required counseling and individualized treatment plans. It also alleged counselor caseloads that made the services impossible and backdated documents. The staffing problem and the billing problem were parts of the same alleged practice.

At New Life Lodge, the complaint supplied another view from inside the billing operation. The whistleblower alleged that she refused to create a second set of books and instead developed a program to improve communication between utilization review and clinical staff. That account identifies the operational divide: the people tracking authorized care and the people delivering treatment needed to be working from the same facts.

The government’s allegations put patients and taxpayers on the same side of the loss: public health care dollars paid for treatment that patients did not receive as billed.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In the CRC case, the Justice Department announced that the former billing employee would receive approximately $1.5 million as her share of the settlement proceeds.

The case began with someone inside billing who could describe the difference between authorized treatment, actual care and the claims submitted. That is the connection our whistleblower experts develop with people who know a treatment business from the inside.

You Know the Care Behind the Claim

If you know how the treatment, the beds and the bills stopped matching, speak with our whistleblower experts. We work with you to build your strongest case, bring in addiction treatment fraud whistleblower lawyers who understand Medicaid billing, and stay with you through the whole journey.