Filings cite alleged $27.7 million DOJ fraud settlement
BY ROGER SMITH
MOUNTAIN CITIZEN
A federal judge has ordered Addiction Recovery Care LLC (ARC), a Kentucky-based addiction treatment company owned by Louisa residents Tim and Lelia Robinson, to appear in federal court this week to answer civil contempt charges for allegedly violating an earlier court order freezing company assets.
The hearing is scheduled for Thursday, Jan. 29, at 10 a.m. in U.S. District Court in Manhattan.
The contempt proceeding is part of a widening legal fight between ARC and Angelica Capital Trust, a Delaware investment firm that claims the company improperly kept more than $8 million in federal tax refunds that were contractually assigned to the trust.
Earlier this month, U.S. District Judge George B. Daniels issued a temporary restraining order blocking the company from transferring money from its Community Trust Bank accounts or reducing its liquid assets below $10 million while the dispute moves to arbitration.
Angelica now claims the company and its owners violated that order, prompting the judge to demand that they explain why sanctions should not be imposed.
The contempt order also requires ARC to turn over bank records, potentially deposit funds into the court’s registry, and submit to depositions.
Federal fraud investigation tied to dispute
Court filings show the financial dispute is intertwined with a much larger federal investigation.
According to Angelica’s petition, the U.S. Department of Justice began investigating ARC after a 2023 whistleblower lawsuit in Eastern Kentucky alleged false Medicaid claims. The investigation later expanded to include Medicare billing nationwide.
By late 2025, the filings say, ARC and its affiliated companies had negotiated a draft settlement agreement with the Department of Justice totaling approximately $27.7 million in alleged overpayments and damages.
The settlement, according to the petition, would allow the company to remain eligible to bill Medicaid and Medicare — a requirement for continuing operations.
Angelica alleges the company sought to raise money for that settlement by selling assets and business entities, and later by retaining federal tax refund proceeds that were supposed to be turned over to the trust.
Network of Kentucky businesses named
The case names a broad group of ARC subsidiaries and related companies operating in Kentucky, including ARC Health Systems LLC, London Valu Rite Pharmacy Inc., which does business as South Creek Drug, Pioneer Health Group LLC, Science Hill Family Care LLC, Springfield Pioneer Rural Health Clinic LLC, Pioneer Rural Health Clinic in Louisa, Riverview Rural Health Clinic in Louisa, Millard College LLC, Main Street Industries LLC, Second Chance Enterprises LLC, Robinson Farm LLC, Destiny Workforce Solutions LLC and Shelton Robinson Properties LLC.
Defense attorneys seek to withdraw
After a Jan. 21 court hearing, attorneys representing ARC and the Robinsons filed motions asking to withdraw from the case, telling the court their clients insisted on taking actions the lawyers fundamentally disagreed with and had failed to cooperate.
Angelica opposed the request, arguing that allowing the company to proceed without counsel would delay enforcement while assets continue to be depleted.
Judge Daniels has not yet ruled on whether the attorneys may withdraw.