Addicted to Greed: Rooting Out Fraud in Substance Abuse Treatment

(This post was written by whistleblower attorney Shelby Serig.)

In response to the opioid epidemic that has ravaged the U.S., many substance abuse clinics and rehabilitation centers have opened throughout the country.  The stated goal of these providers is to help addicts recover and return to a life of productivity. Generally, an increased number of drug treatment facilities for opioid addicts is a positive development.  However, while these facilities bring hope to the afflicted, they also give fraudsters an unfortunate opportunity to profit from addiction.  

Recognizing that substance abuse clinics may be used as a vehicle for fraud, Congress enacted the Eliminating Kickbacks in Recovery Act of 2018 (EKRA).  The purpose of EKRA is to prevent individuals from referring substance abuse patients to rehabilitation centers, clinics or laboratories in exchange for kickbacks.  EKRA prohibits, among other things, the solicitation or receipt of kickbacks in exchange for the referral of urine drug testing services. In passing EKRA, Congress took proactive steps to stop “patient brokers” who refer patients to substandard or fraudulent providers in exchange for kickbacks. 

Theresa C. Merced, of Jackson, Kentucky, is the first person to be convicted of EKRA violations.  Merced, who previously worked as the office manager of a drug treatment center, admitted to soliciting kickbacks from a toxicology laboratory in exchange for urine drug testing referrals.  Merced received cash payment, which was part of a larger package of promised inducements, from the laboratory’s CEO.  Merced also lied to law enforcement agents about the kickback she received and attempted to cover up the kickback by altering certain financial records.  

Merced recently pleaded guilty to EKRA violations and other federal laws.  She is scheduled to be sentenced on May 1, 2020. Mercer faces up to 20 years in prison and a maximum fine of $250,000. 

Morgan & Morgan proudly represents whistleblowers who speak out against fraud. We strongly encourage prospective whistleblowers to obtain counsel to assess their claims and help them file their complaints. Healthcare laws and regulations can be difficult to understand and challenging to navigate. If presented with a valid claim, our team of experienced lawyers and investigators can assist you throughout the legal process, from the initial filing to resolution. Our work is always done on a contingency basis, meaning that we only get paid if you win.  If you know of a company or individual that has committed fraud, reach out to us. All inquiries are treated confidentially.