Federal Addiction Treatment Center Fraud
You run an addiction treatment center. Maybe a sober living home. A recovery program. You've helped hundreds of people get clean - watched them rebuild their lives, reconnect with families, find jobs again. You pay referral fees to marketers who bring in patients with insurance. Everyone in the industry does it. It's just how patient acquisition works.
Federal prosecutors call it patient brokering. And it's a federal crime.
The Department of Justice has built an entire enforcement initiative around addiction treatment fraud - the Sober Homes Initiative, established in 2020, specifically targeting the schemes that became epidemic in Florida and spread nationwide. Two South Florida treatment facility operators were just convicted of a $112 million fraud scheme. A sober home operator got 27.5 years. A doctor who authorized urine tests across 50 treatment centers got 20 years. The "Florida Shuffle" became a federal priority, and the prosecutions keep coming.
Welcome to Spodek Law Group. We defend treatment center operators, sober home owners, and healthcare professionals facing federal addiction treatment fraud charges. If you're under investigation by the FBI, HHS-OIG, or facing a federal grand jury subpoena related to patient brokering or kickbacks - this article explains exactly what you're facing.
The Billion-Dollar Fraud Machine
In June 2025, the Department of Justice announced the largest healthcare fraud crackdown in American history. 324 defendants charged. $14.6 billion in alleged fraud. Strike forces operating in 27 federal districts.
The numbers for addiction treatment fraud specificaly are staggering.
Since 2007, the Health Care Fraud Strike Force has charged more then 5,800 defendants who billed federal and private insurers over $30 billion. The DOJ's Sober Homes Initiative alone has documented over $845 million in false claims from patient brokering schemes - and thats just what theyve prosecuted so far.
The "Florida Shuffle" became the template. Treatment centers and sober homes would cycle insured addicts through multiple facilities, billing repeatedly for services that were unnecessary, never provided, or only provided as cover for the real business model: running up insurance claims. Dr. Michael Ligotti in Palm Beach County got 20 years in federal prison. His scheme? Authorizing unnecesary urine drug tests across more than 50 sober homes and treatment facilities. Between 2011 and 2020, the operation fraudulently billed healthcare programs $746 million. They actualy collected around $127 million.
Kenneth Chatman's case is the one that gets referenced in DOJ training materials.
Chatman ran sober homes in Florida. Thousands of people struggling with addiction checked in hoping to turn there lives around. According to the FBI, what they found were "drug-infested flophouses." No treatment. Many patients were given drugs - to keep them enrolled and billing insurance. Some were forced into prostitution. Chatman pleaded guilty to conspiracy to commit healthcare fraud, money laundering, and sex trafficking. His sentence: 27.5 years in federal prison.
The South Florida brothers who got convicted in February 2025 operated two addiction treatment facilities. The federal jury found they fraudulently billed aproximately $112 million for services that were never provided or were medically unnecesary. They paid kickbacks to patients through recruiters. Its the exact pattern DOJ has been targeting since the Sober Homes Initiative launched.
How Referral Fees Become Federal Crimes
Two federal laws govern addiction treatment kickbacks. Understanding the difference between them is critical - because one of them is probably broader than you realize.
The Anti-Kickback Statute (AKS) applies to federal healthcare programs. Medicare. Medicaid. TRICARE. If your facility accepts federal program patients and you're paying kickbacks for referrals, you're violating the AKS.
EKRA - the Eliminating Kickbacks in Recovery Act - is different.
EKRA applies to ANY healthcare benefit program. Private insurance. Commercial payers. Cash-pay patients with reimbursement. It was passed in 2018 specifically to target the addiction treatment industry's kickback epidemic, and it reaches conduct that the AKS doesn't touch.
The penalties are severe. EKRA violations carry up to 10 years in federal prison and $200,000 in fines per violation. Thats per referral. Per patient. Per transaction. The exposure multiplies fast.
Most treatment center operators don't realize what triggers EKRA liability.
Body brokers - patient recruiters who recieve kickbacks for referrals. In the addiction treatment industry, theyre everywhere. They find patients with insurance, refer them to facilities, and collect fees. When you pay them, YOU violate EKRA.
Recent prosecutions from DOJ's Central District of California:
- An Orange County sober home owner was indicted for paying $174,600 in kickbacks to body brokers between April 2020 and October 2021. Twelve counts of illegal remunerations.
- Another defendant paid more than $350,000 in illegal kickbacks for patient recruitment.
- A treatment facility owner got 15 months for paying drug addicts to enroll in his rehabilitation program.
The broker's crime becomes your crime. The government traces the money back. Your marketing partner's testimony becomes your conviction.
Heres the paradox that trips people up.
Even if you ACTUALLY provided legitimate treatment - real therapy, real services, real help for real patients - paying kickbacks makes every claim you submitted false. The government dosent need to prove patient harm. They don't need to prove the services were unnecessary. They just need to prove you paid for referrals. The tainted referral contaminates every claim that flowed from it.
Michael Brier learned this in Rhode Island. He owned an addiction treatment chain. According to U.S. Attorney Zachary Cunha, Brier "held out his business as a lifeline to vulnerable patients." But he "directed his own employees not to provide the sessions that these patients needed." Sentence: 98 months in federal prison. Restitution: $3,515,100. His mission statement - helping addicts recover - became evidence of the fraud.
What Happens When You Get Caught
One kickback arrangement triggers multiple federal charges. The charge stacking is methodical.
EKRA violation. Anti-Kickback Statute violation (if federal programs involved). Wire fraud for electronic billing. Healthcare fraud. Money laundering if you spent the proceeds. False Claims Act civil liability on top of criminal prosecution.
Recent sentences from DOJ press releases tell the story:
- Kenneth Chatman (Florida sober homes): 27.5 years + forfeiture
- Dr. Michael Ligotti (urine testing scheme): 20 years for $746 million billed
- Michael Brier (Rhode Island treatment chain): 98 months + $3.5 million restitution
- Schena (EKRA kickbacks, California): 8 years + $24 million restitution
- Two South Florida facility operators: 188 months and 97 months respectively
These aren't outliers. This is the enforcement pattern.
The Arizona scheme shows how far the government will chase this. A defendant allegedly orchestrated a $650 million fraud targeting an Arizona Medicaid program for Native American addiction treatment. He recruited patients from reservations and homeless populations in exchange for kickbacks. According to DOJ, he recieved $24.5 million in proceeds. Some of it allegedly went to purchase a $2.9 million golf estate in Dubai.
Prosecutors aren't just looking at the billing fraud. There looking at what you did with the money.
The "helping people" defense does not work.
Every operator claims they were providing real help. Every sober home owner says they genuinely cared about patients. Prosecutors have heard it thousands of times. What matters is the money flow. Did you pay for referrals? Did you bill for services connected to those referrals? The "I was helping addicts" narrative becomes evidence that you understood the industry - and knew what you were doing was wrong.
Beyond prison time, the consequences cascade. Forfeiture of assets - vehicles, property, accounts. Restitution orders that have reached $71 million in some cases. Permanent exclusion from all federal healthcare programs. State professional license revocation. Civil qui tam lawsuits filed by whistleblowers under the False Claims Act.
If Your Under Investigation
The rules if federal agents contact you.
Do not talk to investigators without counsel present.
This sounds obvious. But treatment center operators regulary make the mistake of thinking they can explain there way out. "I was just trying to help people." "I didn't know that was illegal." "Let me show you the legitimate services we provided." Every statement becomes evidence. The "I didn't know" defense requires careful legal framing - blurting it out to an FBI agent destroys the strategy.
Investigators are building a case. They already have documents, billing records, probably testimony from your marketing partners or former employees. They're not there to hear your side. They're there to get admissions.
If you're under investigation or have reason to believe you might be:
- Don't destroy documents, billing records, or communications. Obstruction charges get added.
- Don't contact patients, staff, or marketing partners about the investigation. Witness tampering gets added.
- Don't make any payments or arrangements that could look like consciousness of guilt.
- Contact federal defense counsel immediately. Not tomorrow. Today.
Todd Spodek has defended healthcare professionals and treatment facility operators facing federal fraud charges. He understands how EKRA and the Anti-Kickback Statute intersect, what the government needs to prove, and where the defenses actually work.
When Your Ready
If you operate an addiction treatment facility, sober living home, or recovery program and you're facing federal investigation - Spodek Law Group can help you understand your exposure and your options.
The consultation is free. Theres no obligation.
What you'll get is an honest assessment of were things stand. Is this still at the civil investigation stage? Has it been referred for criminal prosecution? What evidence does the government likely have? What defenses might apply - lack of knowledge, safe harbor exceptions, good faith reliance? What are realistic outcomes, not best-case fantasies?
Call us at 212-300-5196. Early intervention in healthcare fraud cases provides options that disappear once charges are filed. The difference between civil resolution and criminal prosecution often comes down to when you got counsel involved.
The government is aggressive on addiction treatment fraud. There treating it as a priority. If you're in there sights, the time to act is now.
Were here when you need us.
