A joint investigation by the Center for Investigative Reporting (CIR) and CNN has identified what they describe as widespread Medi-Cal fraud among clinics in California providing drug rehabilitation services.

The yearlong probe implicated 56 clinics in schemes that may have ripped off the state’s version of Medicaid for $94 million over a two-year period. That’s about half the money spent through the program on drug rehabilitation for the poor.  

Clinics allegedly round up clients from foster care, board-and-care homes and off the street who don’t have addictions or need rehabilitation and submit paperwork based on their participation in the program. Sometimes the clinics simply use “ghost clients” who are behind bars, dead or otherwise indisposed.

The two news gathering organizations documented numerous incidents of obvious fraud but were unable to engage state officials while compiling their report despite repeatedly submitting questions and requesting public records.

The Department of Health Care Services finally announced a crackdown in mid-July—temporarily barring 16 clinics from participation in the Medi-Cal drug program and referring the cases to the state Attorney General—two weeks after CIR and CNN submitted their findings to the state. All 16 clinics are managed by the counties in which they reside.

A spokesman for the department told the Los Angeles Times that the actions were partly prompted by inquiries from news organizations.

The department’s director, Toby Douglas, refused to meet with reporters, as did his boss, Health and Human Services Agency Secretary Diana Dooley. CNN filmed Dooley in June dodging reporters in a hallway outside a public meeting, trying to duck into a locked restroom and then curtly blowing them off with a two-sentence statement. Her spokesperson later offered to arrange an interview if CNN agreed to dump the footage. They refused.

One scam documented by the investigative team involved foster children at So Cal Health Services in Riverside. A former counselor there told the reporters that the clinic, which billed the state between $31 and $75 for each visit, would concoct stories of addiction for the kids. “You’d have to make up a summary of them trying this drug and make up scenarios of how they tried it, how they got it,” Nadine Cornelius reportedly said. “It was all lies.”

Instead of the clinic conducting rehabilitative therapy, the children would just watch movies and play games, she said.

Reporters said the clinics were adept at fending off regulators, auditors and other curious county and state officials who might make inquiries. The counties administer the Medi-Cal funds that flow from the federal government through the state.

–Ken Broder

To Learn More:

California Rehab Clinics Bill Taxpayers for Fake Clients, Addictions (by Will Evans and Christina Jewett, Center for Investigative Reporting)

State Suspends 16 Medi-Cal Drug Treatment Centers (Associated Press)

16 Medi-Cal Substance Abuse Treatment Centers Are Under Investigation (by Titania Kumeh, Los Angeles Times)