BY ROGER SMITH
MOUNTAIN CITIZEN

ASHLAND — Addiction Recovery Care and two affiliated health care companies have agreed to a $16.2 million civil judgment to resolve federal allegations that they improperly billed Kentucky Medicaid for behavioral health and medical services over a period spanning nearly seven years.

The U.S. Attorney’s Office for the Eastern District of Kentucky and the Kentucky Attorney General’s Office announced Monday that ARC, Pioneer Health Group LLC and Science Hill Family Care LLC had agreed to the $16,205,774.05 judgment in favor of the United States.

The announcement supplied the amount ARC did not disclose when the Louisa-based company announced earlier this month that it had settled U.S. Department of Justice civil claims involving historical Medicaid billing practices.

The Justice Department said the settlement resolves allegations that ARC and its affiliates violated the False Claims Act, a federal law prohibiting false or fraudulent claims for payment from government programs, including Medicaid.

Earlier this year, a draft settlement disclosed in separate creditor litigation indicated ARC could pay approximately $27.7 million. The final judgment is nearly $11.5 million below the amount contemplated in that draft.

Whistleblower

The federal civil investigation began after current and former ARC employees Rikki Pope, Samantha Carroll and Leanna Williams (formerly Murphy) filed a whistleblower complaint in April 2023.

The employees alleged ARC submitted fraudulent claims to Kentucky Medicaid for behavioral health services provided through its addiction treatment programs.

The complaint was filed under the False Claims Act’s qui tam provisions, which allow private citizens to pursue fraud allegations on behalf of the federal government. Whistleblowers may receive a portion of money recovered through a settlement or judgment.

While the government was investigating, ARC disclosed that it should not have billed Medicaid for some services, including services identified in the whistleblowers’ complaint, according to the Justice Department.

The recently unsealed case is captioned United States ex rel. Rikki Pope, et al. v. Addiction Recovery Care LLC in U.S. District Court for the Eastern District of Kentucky.

Alleged upcoding

Federal officials alleged ARC misrepresented the qualifications of some clinicians on claims submitted to Kentucky Medicaid to obtain higher reimbursement rates.

From January 2018 through March 2024, services including psychotherapy, psychiatric evaluations and mental health assessments allegedly were performed by workers with lower-level credentials but billed as though they had been provided by employees holding higher-level professional licenses.

The government also alleged that from July 2019 through mid-June 2021, ARC billed Medicaid for higher-paying individual therapy sessions when it had provided less expensive group therapy.

Overstating a provider’s qualifications or billing a service at a higher rate than the care provided warrants is commonly called upcoding.

Federal officials alleged the practices caused ARC and its affiliates to receive Medicaid payments to which they were not entitled.

The government further alleged that ARC affiliates submitted duplicate office-visit claims from January 2019 through December 2024.

Some visits were reportedly billed separately, even though Medicaid had already reimbursed the companies for those services through an inclusive daily, or per diem, rate.

One ARC affiliate also allegedly billed for care-management services that did not meet Kentucky Medicaid’s coverage requirements, including services performed by employees who lacked the required credentials.

The stipulation filed in federal court describes the judgment as resolving alleged False Claims Act violations involving claims for peer-support services and services submitted with inaccurate, more expensive billing modifiers.

Judgment reduced

Federal officials said the judgment will be paid over several years and was negotiated and reduced because of the defendants’ financial condition and prospects for continued operations.

The settlement took effect July 16.

ARC, Pioneer Health Group and Science Hill Family Care agreed to be jointly and severally liable for the $16.2 million.

The agreed judgment requires the companies to pay the whistleblowers’ attorneys’ fees, costs and expenses under the terms of the settlement. The court would retain jurisdiction to enforce the agreement.

Federal criminal case

Separately from the Medicaid settlement, ARC founder Timmy G. Robinson Jr., 50, of Louisa, faces a federal criminal case after his June 4 indictment on one count of wire fraud and two counts of money laundering.

Prosecutors allege Robinson caused ARC to sell or assign rights to anticipated Employee Retention Credits to one buyer and later sell the same assets to a second buyer.

ARC received a $2.7 million advance from the first buyer while the second buyer paid ARC an advance of $4.7 million.

After the Internal Revenue Service issued the credits in December, prosecutors allege Robinson directed ARC not to repay either buyer.

Robinson has pleaded not guilty. His trial is set to begin Aug. 10 before U.S. District Judge David Bunning.

On Tuesday, Robinson’s attorney, Michael B. Fox, filed a motion asking the court to postpone the trial and extend the July 29 deadline for Robinson to seek rearraignment.

Fox said prosecutors had provided “extensive and voluminous” discovery involving numerous financial transactions, corporate entities and bank records.

Meanwhile, he said the defense is seeking additional records and needs more time to identify, locate and interview witnesses, many of whom live outside Kentucky, according to the motion.

(Editor’s note: An indictment is an accusation. Robinson is presumed innocent unless proven guilty in court.)

Creditor judgment

The allegations in Robinson’s criminal case overlap with civil litigation in the U.S. District Court for the Southern District of New York involving Clear Cove Opportunities Fund I LLC and Angelica Capital Trust, two companies claiming interests in ARC’s Employee Retention Credit proceeds.

ARC and Robinson agreed earlier this month to a proposed $3,940,470.02 judgment for breach of contract in favor of Clear Cove.

U.S. District Judge Mary Kay Vyskocil has not entered the proposed judgment but scheduled a conference for July 29 to consider the agreement.

A joint filing Tuesday by Clear Cove, Angelica, ARC and Robinson disclosed that an American Arbitration Association tribunal issued an award July 27 in Angelica’s favor against ARC, Robinson and several ARC affiliates.

The filing does not state the amount of the award.