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Fake drug and alcohol treatment centers cause a big scandal in Arizona

MICHEL MARTIN, HOST:

State officials in Arizona have called it the biggest scandal in state history, fake drug and alcohol treatment centers lured in patients, apparently targeting Native Americans. Now several families are suing. Here's Camryn Sanchez from member station KJZZ in Phoenix.

CAMRYN SANCHEZ, BYLINE: Two years ago, Carson Leslie died on the way to get treatment for alcoholism.

CARLETTA LESLIE: I feel like he had a long life to live.

SANCHEZ: That's his daughter, Carletta Leslie. She says the people transporting her father were not part of a real rehab program but wanted to use him to defraud the state's Medicaid system and never intended to provide any services at all.

LESLIE: He had a granddaughter to meet and never got to meet. I think it's unfair. I believe it's unfair. He was kind and sweet. He was happy.

SANCHEZ: Carletta is part of a group of families suing the facilities and the state of Arizona for allowing the alleged fraud to take place. Attorney Dane Wood says former Republican Governor Doug Ducey's administration allowed fraudulent businesses to take advantage of Arizonans with little oversight. He also says he's not impressed with the current administration's efforts to stop the fraud.

DANE WOOD: It's a very small, very incomplete kind of approach. And it's a very reactive approach, whereas government administrators are tasked with the idea of protecting, you see, the public from this kind of thing from happening in the first place.

SANCHEZ: According to the lawsuit filed in March, the alleged scheme targeted Native Americans who are eligible to receive health care through the American Indian Health Plan, which is part of Medicaid. Victims, like Vanessa Tortice, say fraudsters lured her with money or drugs.

VANESSA TORTICE: One time I was drinking at the bus stop and there was this guy who - he offered me $20 just for my name and date of birth to see if I qualify under their home. And then he offered to pay me.

SANCHEZ: The scam intensified during the pandemic, when federal and state governments loosened requirements on treatment providers. In Arizona, that meant fewer site visits and other checks, which led to more opportunities for abuse, neglect and fraud. Arizona's Democratic Attorney General Kris Mayes estimates $2.8 billion was paid out to fake providers. Her administration has only recovered a fraction of the money.

KRIS MAYES: In some cases, the state and the taxpayers were defrauded of millions of dollars by a single person. And when you see that, it just makes you mad.

SANCHEZ: When they took office in 2022, Mayes and Democratic Governor Katie Hobbs slammed the former Republican administration for not addressing the crisis. They also implemented new policies hoping to mitigate fraud. The state's Medicaid provider suspended payments to over 300 behavioral health treatment facilities in the state. In a statement, former Republican Attorney General Mark Brnovich said that any suggestion his administration allowed fraud to go unchecked was, quote, "an insult and defamatory." He says he prosecuted a record number of health care fraud cases. But Mayes says the previous attorney general and governor didn't go far enough.

MAYES: We began the painful process of shutting off the spigot to these fraudsters. And that is the ultimate source of the problem.

SANCHEZ: Democratic state Senator Theresa Hatathlie is Native American and has proposed a bill that would require more oversight of the addiction treatment industry.

THERESA HATATHLIE: Whenever you have crime, you have fraud this extensive, there's people in these departments who have been scratching other people's backs.

SANCHEZ: Hatathlie's bill would increase penalties for fraud and require behavioral health facilities to implement background checks and fingerprint employees. But it's stalled in the legislature amid opposition from medical groups who say it would be impossible to implement. Other efforts are still advancing, but Hatathlie says they aren't extensive enough.

HATATHLIE: These two bills over here do not address behavioral health entities. They're the ones that did the crime.

SANCHEZ: Members of the Native American community in Arizona say people are still being recruited into fake treatment homes. Governor Hobbs says she wants lawmakers to pass a solution during this year's legislative session, which will likely end sometime this summer.

For NPR News, I'm Camryn Sanchez in Phoenix. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Camyrn Sanchez