In what is thought to be the first case of fraudulent enrollment of individuals under the Affordable Care Act (ACA), a Southern California father and son have been fined and sentenced to federal prison for falsely signing up individuals for drug treatment at rehab centers.
Jeffrey White, 63, and his son, Nicholas White, 35, had been previously charged by the U.S. Department of Justice (DOJ) for operating the scheme, in which the DOJ said they recruited individuals struggling with substance use disorder (SUD) and enrolled them in ACA plans in states where they did not reside, but where ACA offered generous reimbursement rates for treatment services.
Both men initially plead guilty in 2018 to one count each of conspiracy to commit health care fraud.
The elder White was sentenced to 36 months in prison and three years of supervised release, while his son was handed a 13-month sentence and a similar three years of supervised release. Both men were sentenced February 23, and have been ordered to pay restitution in the approximate amount of $27.6 million.
According to court documents and statements, the Whites’ scheme involved creating phony personal information and references for individuals seeking treatment, from fake leases and landlords to made-up cell phone numbers. The goal was to get people ACA coverage in states where they didn’t live.
The Whites would then pay insurance premiums for individuals and shuttle them out to expensive rehab centers in California.
The treatment programs would bill ACA — commonly referred to as Obamacare — thousands of dollars each week for lab tests such as blood or urine toxicology screenings. The DOJ said the Whites collected thousands of dollars for each referral and profited approximately $1 million through the scheme.
The Whites ultimately defrauded ACA programs in 12 states to a total of $27 million, according to the DOJ. Those states include California, Arizona, Connecticut, Delaware, Indiana, Kentucky, New Jersey, Ohio, Oregon, Pennsylvania, Tennessee and Texas. The scheme initially came to light when an insurer flagged several unrelated individuals in Connecticut seeking SUD treatment, after noticing that they all shared a similar address in the state.
The investigation was conducted by the Office of the Inspector General of the U.S. Department of Health Human Services, the Federal Bureau of Investigation, the Internal Revenue Service’s Criminal Investigation Division and the U.S. Postal Inspection Service.
The sentence is another blemish on the residential SUD treatment sector, which continues to be plagued by allegations of impropriety throughout the space.
The National Association of Addiction Treatment Providers (NAATP) has purged a number of its members in recent years over unscrupulous business practices and commissioned a three-year strategic plan in 2019 to address those issues.
“While much of business activity from 2015 to 2018 has proven to be beneficial for those with SUD, the treatment field saw a large influx of bad players, profiteers, and patient brokers, all of which required policy responses from leadership,” the NAATP said in the report. “Our field experienced such a severe ethical crisis that NAATP came to believe that we must address the issue by creating and enforcing within our membership clear and absolute professionalism and ethics standards.”
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