Tennessee rehab facility settles whistleblower case for $9.25 million

by Ben Vernia | April 20th, 2014

On April 16, the Department of Justice announced that a Burns, Tennessee-based residential substance abuse treatment facility has paid $9.25 million to resolve allegations, originally brought by a whistleblower, that it

The Department of Justice announced today that CRC Health Corp. (CRC) has agreed to pay $9.25 million to the federal government and the State of Tennessee to settle allegations that CRC knowingly submitted false claims by providing substandard treatment to adult and adolescent Medicaid patients suffering from alcohol and drug addiction at its facility in Burns, Tenn. CRC, based in Cupertino, Calif., is a nationwide provider of substance abuse and mental health treatment services.

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CRC owns and operates a residential substance abuse treatment facility in Burns, Tenn., called New Life Lodge. The government alleged that, between 2006 and 2012, New Life Lodge billed the Tennessee Medicaid program (TennCare) for substance abuse therapy services that were not provided or were provided by therapists who were not properly licensed by the state of Tennessee. The government also alleged that New Life Lodge failed to make a licensed psychiatrist available to patients at the facility, as required by the state’s regulations; failed to maintain patient-staffing ratios required by Tennessee Department of Mental Health regulations and billed for Medicaid patients in excess of the state-licensed bed capacity at the facility. In addition, the government alleged that New Life Lodge double-billed Medicaid for prescription substance abuse medications given to residents at the facility. New Life Lodge currently is not treating Medicaid patients at its facility.

The Department announced that the whistleblower, a former employee of CRC’s billing department, will receive $1.5 million (a 16.2% relator’s share).

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