Life Touch, LLC: Gift Cards for Patients, Charity Stories for Auditors

The Life Touch, LLC fraud case involved more than $12.7 million in fake Medicaid billings from a gift-card kickback scheme, according to the Justice Department’s criminal-case account. The government’s criminal information describes staff coordinating the cards while telling auditors that outside charities supplied them. The same people handled the payments and the explanation.

Life Touch operated substance-use treatment facilities in Kinston and Goldsboro, North Carolina. In its March 2026 account of the criminal case, the Justice Department reported that the company had pleaded guilty to health care fraud. The detailed audit story appears in the criminal information against its compliance officer: patient complaints, written warnings, text messages and documents created to make the gift cards look like someone else’s work.

Patient Gift Cards Followed Treatment Attendance

The criminal information alleged that Life Touch made gift cards conditional on attending treatment. Patients who attended five times a week generally received $60, compared with $50 for four visits and $45 for three. Some received an extra card for bringing in another patient.

The information describes gift cards going to patients by January 2018 and continuing through at least November 16, 2023. It says Life Touch received as much as $25 million in North Carolina Medicaid substance-abuse service proceeds during the period when it gave patients more than $1 million in gift cards.

Life Touch provided intensive and comprehensive outpatient substance-use treatment under a contract with Eastpointe Human Services. Eastpointe was the Medicaid managed care organization handling those program payments. As the criminal information explains, providers could bill North Carolina Medicaid directly through NCTracks or submit claims to a contracted health plan. For Life Touch’s Eastpointe services, the payer relationship also brought the audits.

That connection matters inside a treatment business. The claim identifies a patient, a service and a service date. The gift-card records described in the information tracked how often patients came in. Staff messages coordinated card purchases and reimbursements across the offices. We look at those records together because the attendance that supported the bill also determined the incentive.

Laboratory Referrals Brought Another Payment

The Justice Department’s criminal-case account describes payments in the other direction, too: the owner of 1st Choice Healthcare Services paid kickbacks to Life Touch’s compliance officer and Kinston office manager for laboratory services ordered by Life Touch. The department described those services as fake. 1st Choice was a urine drug screening company, and the compliance officer billed Medicaid for both businesses. The department also reported the laboratory owner’s guilty plea involving kickbacks, healthcare fraud and false documents.

The laboratory relationship was close to the treatment operation. According to the criminal information, the laboratory owner had worked at Life Touch handling patient intakes and answering its Kinston office phone. The Kinston office manager was the mother of both the laboratory owner and Life Touch’s owner. The referral payments, shared billing work and family relationship explain who had access to the patients, the claims and the money.

What Changed When Medicaid Auditors Asked About the Cards

According to the criminal information, Life Touch kept supplying cards after Eastpointe substantiated the practice and gave the company a written warning. Later audit responses presented a church, then a purported charity, as the source of the cards. The paperwork changed while the payments continued.

An Earlier Audit Had Already Found the Gift Cards

Eastpointe began an audit in January 2018 after a Medicaid recipient reported being offered Visa gift cards for providing a Medicaid number and attending Life Touch classes. Auditors interviewed patients and employees, reviewed claims, visited the provider and requested records. The information says they substantiated attendance-based gift-card payments.

On September 30, 2019, auditors sent Life Touch written notice of that finding and federal guidance about patient incentives. The information then describes continued card purchases and distribution after that warning. Its text-message table includes staff discussing card totals, transfers and reimbursements. This was an operating routine that had survived a direct challenge from the payer.

The Church Explanation Closed an Audit

A further complaint in January 2020 triggered another Eastpointe audit. The criminal information alleged that Life Touch responded by making Refuge House of God appear responsible for purchasing and providing the gift cards. The compliance officer created an incentive letter with space for a patient’s signature and later told auditors that the church supplied the assistance.

The church had a family connection: the information describes its founder as the Kinston office manager’s mother-in-law and Life Touch’s owner’s grandmother. Staff also used the church explanation with patients. The document describes a message telling a patient that the church had sent a card, and a photograph of a card bearing the church’s name as sender.

The information says the audit closed without substantiating the gift-card allegation, based partly on false information from the compliance officer and others. It also says Life Touch continued providing the cards throughout that period.

We see a provider allegedly buying the cards and writing its own excuse for them. The explanation became part of the operation.

Changing Lives Supplied the Next Explanation

Further patient gift-card complaints in 2021 led to another audit. According to the criminal information, staff now presented Changing Lives as the organization supplying the cards. Prosecutors described it as a shell used to make the payments appear independent of Life Touch.

The information alleged that corporate records were altered to make a laboratory employee appear to run Changing Lives, although that employee played no actual management role. The Kinston office manager directed that its email and physical mail go to locations she controlled. The compliance officer and office manager then created and used patient consent forms that purported to authorize release of patient information to Changing Lives.

Those forms supplied a missing part of the story: how an outside charity would know which patients should receive a card. Prosecutors alleged that the forms provided that explanation while the same Life Touch staff continued directing the purchases and distribution.

The state’s Medicaid Investigations Division also pursued the matter. The information says it demanded incentive policies and patient-benefit records from Life Touch and 1st Choice in 2022. Life Touch allegedly responded with the false consent forms. Eastpointe also referred the matter for further investigation despite making no direct findings in its later audit.

The Compliance Officer Controlled Billing and the Audit Response

Life Touch’s compliance officer also managed the Goldsboro office, billed Medicaid for both Life Touch locations and 1st Choice, and oversaw quality management and audits, according to the criminal information. Her work connected the claims to the explanations given when the payer questioned them.

The filing quotes a message she sent Life Touch’s owner on August 29, 2022:

The concern in that message was that auditors were speaking to the patients receiving the cards. The information next describes her telling Eastpointe that Life Touch no longer gave incentives and that Changing Lives supplied them. She also delivered a statement on Life Touch letterhead denying that the agency gave motivational incentives.

In a later interview with the Medicaid Investigations Division, she allegedly said Life Touch had stopped supplying cards after an earlier audit. Prosecutors alleged that she continued directing gift-card payments during the investigation. The official account of her guilty plea identifies health care fraud conspiracy, illegal payments and materially false documents among the conduct involved.

The employee overseeing compliance also had access to billing and the card arrangements. The messages quoted in the information let investigators compare what she knew inside the business with what she told the payer.

The Office Manager Helped Build the Charity Paperwork

The Kinston office manager’s alleged role joined the laboratory payments, gift-card distribution and Changing Lives documents. The criminal information describes her control over the purported charity’s communications and her participation in the patient consent forms. The Justice Department’s later criminal-case account also identifies her as a recipient of laboratory kickbacks and reports her guilty plea involving kickbacks, healthcare fraud and false documents.

By August 2022, according to the information, she had created and used a document for Life Touch patients that said:

Questions about that document went to the compliance officer and the office manager. Prosecutors alleged that those same staff members were still supplying the cards. A later version told patients that Life Touch referred people to nonprofit agencies for assistance.

The contradiction was written into the process: the forms distanced Life Touch from incentives, while the people handling those documents allegedly continued arranging the incentives. The office manager’s role matters because it connects the explanation on paper to the staff, communications and payment arrangements behind it.

The Owner and the Cash in His Safe

The Justice Department’s criminal-case account followed the money to Life Touch’s owner in Texas. It said he received proceeds from the operation but failed to file or pay taxes on that money. The department said that, after learning of the criminal investigation in November 2023, he withdrew more than $1 million in cash from a bank account and hid it in a safe at his home. The department reported that he pleaded guilty to failing to file federal tax returns.

What an Insider Can See in the Audit Trail

The Life Touch criminal information connects attendance, card purchases, billing, text messages and audit responses. It gives the documents a sequence: a payer asks about a practice, staff offer an outside explanation, and internal communications show who continued doing the work. We examine that sequence with the people who saw it happen.

A related pattern appears in Journey to Hope Health and Healing’s case, brought by former employees. After joining that case, the government alleged in its complaint that counselors prepared for an accreditation review by copying patients’ treatment plans and creating years of plans without seeing the patients. In Life Touch’s information, the allegedly manufactured explanation concerned who supplied patient incentives. In Journey’s complaint, it concerned treatment records. Both accounts put preparation for scrutiny inside the alleged scheme.

Journey and its former chief executive later agreed to pay $10,200,000 to resolve the civil allegations. Knowledge of how records were created can connect the Medicaid claim with decisions inside the business.

Life Touch’s criminal investigation involved the FBI, IRS, the Department of Health and Human Services Office of Inspector General, and the North Carolina Attorney General’s Medicaid Investigations Division.

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

You Saw Who Paid and Who Explained It

If you saw patient cards, laboratory payments or audit documents change hands, speak with our whistleblower experts about what happened inside the business. We build the case with you, bring in behavioral health fraud whistleblower lawyers who understand treatment billing and referral payments, and remain your partners throughout the case.