Addiction Recovery Care, LLC and its affiliates Pioneer Health Group, LLC and Science Hill Family Care, LLC have agreed on July 27 to a civil judgment of $16,205,774.05 to resolve allegations that they defrauded the Kentucky Medicaid program. The agreement was announced by the U.S. Attorney’s Office and the Office of the Kentucky Attorney General.
The judgment is part of a civil settlement addressing claims that Addiction Recovery Care (ARC) and its affiliates violated the False Claims Act by submitting false claims for payment to government programs, including Medicaid. ARC operates residential and outpatient drug rehabilitation facilities throughout Kentucky, offering behavioral healthcare and medical services at these locations.
According to the announcement, current and former employees filed a qui tam complaint in April 2023 alleging ARC submitted fraudulent claims for behavioral health services provided through their rehabilitation programs. Under federal law, private citizens can file such complaints on behalf of the United States if they believe fraud has occurred against government programs. During an ensuing investigation by federal authorities, ARC self-disclosed that it should not have billed for some services identified in the whistleblower complaint.
The settlement agreement states that from January 2018 to March 2024 some behavioral health services—such as psychotherapy or psychiatric evaluations—were allegedly provided by lower-level healthcare workers but billed as if performed by higher-licensed staff members. From July 2019 to mid-June 2021, ARC allegedly claimed reimbursement for individual therapy sessions when group sessions were actually provided at a lower cost. The government said these practices led ARC and its affiliates to receive payments they were not entitled to under federal rules prohibiting so-called “upcoding.” Additional allegations include duplicate billing for office visits between January 2019 and December 2024, as well as charging for care management services not meeting state requirements.
The civil judgment resolves United States ex rel. Rikki Pope et al v. Addiction Recovery Care LLC (Case No. 0:23-cv-51-DLB), which was recently unsealed by the court. The payment amount will be made over several years due to defendants’ financial condition; individuals who filed the qui tam complaint are eligible for a portion of proceeds from this settlement.
This matter was investigated by several agencies including the Affirmative Civil Enforcement section of the U.S. Attorney’s Office with assistance from federal health authorities, state officials, and law enforcement agencies such as the Federal Bureau of Investigation.
The U.S. Attorney for the Eastern District of Kentucky enforces federal laws—including those involving healthcare fraud—and works with various agencies on community initiatives like drug abuse prevention, according to the official website.
Officials emphasized that all claims resolved are allegations only; there has been no determination of liability.