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Press Release

United States Attorney Announces $17 Million Healthcare Fraud Settlement

For Immediate Release
U.S. Attorney's Office, Southern District of West Virginia



CHARLESTON, W.Va. – United States Attorney Mike Stuart, along with Special Agent in Charge Maureen R. Dixon, United States Department of Health and Human Services – Office of Inspector General (HHS-OIG), Acting Assistant Special Agent in Charge Justin Schoeman, Drug Enforcement Administration (DEA), Cabinet Secretary Bill J. Crouch, West Virginia Department of Health and Human Resources, and Director Mike Malone, West Virginia Medicaid Fraud Control Unit (MFCU), announced that his office has settled healthcare fraud claims against Acadia Healthcare Company, Inc. (“Acadia”).  Pursuant to the settlement agreement, Acadia will pay  $17 million to resolve allegations of a billing scheme that defrauded Medicaid of $8.5 million.  The settlement represents the largest healthcare fraud settlement in the history of West Virginia and is twice the actual loss from the scheme.  Of the $17 million settlement, nearly $2.2 million will be paid directly to the State of West Virginia.

“$17 million – the largest healthcare fraud settlement in the history of West Virginia,” said United States Attorney Mike Stuart. “$8.5 million in Medicaid fraud means $8.5 million in fraud to the taxpayers. Nearly 600,000 West Virginians rely on Medicaid for the payment of critical services.  Medicaid fraud is not a victimless crime.  I am proud of the work of my office and that of our partners to ensure the end of this multi-million dollar scheme.  In this case, every dime in false billings was doubled for a total settlement that represents twice the harm caused. This is a strong message and a massive penalty.  The message is clear – if you are cheating the system and we find you, you’ll not only pay for the damage done but far more. This is a message of deterrence to other would-be fraudsters.” 

Acadia, acting through its subsidiary, CRC Health, L.L.C. (“CRC”), operates seven drug treatment centers in West Virginia.  These treatment centers are located in Charleston, Huntington, Parkersburg, Beckley, Williamson, Clarksburg, and Wheeling.  The West Virginia Centers provide outpatient drug treatment, including the administration of Methadone and the prescribing of Suboxone and Subutex.  Each of Acadia’s West Virginia treatment centers is certified by the Centers for Medicare and Medicaid Services (“CMS”) to perform uncomplicated “waived” laboratory testing only.  Waived laboratory tests are simple tests with a low risk for an incorrect result. “Non-waived” laboratory testing, in contrast, consists of moderate and high complexity testing.  Laboratories that perform non-waived tests are required to have a significantly higher level of certification than the certifications held by the Acadia treatment centers.  

From January 1, 2012 to July 31, 2018, Acadia’s treatment centers sent urine and blood samples to an outside laboratory, San Diego Reference Laboratory (the “San Diego Lab”) for all moderate and high complexity drug testing.  The San Diego Lab performed the testing and invoiced Acadia’s treatment centers for the services, and did so at the request of the treatment centers.  Acadia’s treatment centers paid the San Diego Lab directly.  However, Acadia’s West Virginia treatment centers then billed West Virginia Medicaid for the urine and blood testing performed by the San Diego Lab, as though the testing had been performed by the treatment centers.  In the claims for reimbursement submitted to Medicaid, Acadia’s treatment centers represented that they had performed the moderate and/or high complexity laboratory services.  Medicaid, induced by the claims submitted by Acadia’s treatment centers, paid the treatment centers a substantially higher amount than the San Diego Lab charged to actually perform the testing.  Medicaid regulations and policies specifically prohibited Acadia’s treatment centers from seeking reimbursement for moderate and complex urine and blood testing which they were not certified to perform, and did not, in fact, perform.

Medicaid paid Acadia’s treatment centers $8,500,000 as a result of these moderate and complex urine and blood testing claims, resulting in a loss of $2,181,100 to the State of West Virginia and $6,318,900 to the United States.  The Medicaid program is primarily administered by the states, but jointly financed by federal and state funds – funds ultimately originating from taxpayers.  As a result of the $17 million settlement, which represents twice the actual loss suffered by Medicaid, both the state and federal programs will be made whole. 

As part of this settlement, CRC Health and Acadia Healthcare entered into a five-year corporate integrity agreement (CIA) with HHS-OIG.  The CIA requires CRC and Acadia to maintain a compliance program, implement a risk assessment program, and hire an Independent Review Organization to review Medicaid claims. 

Medicaid fraud cost states billions of dollars every year, diverting funds that could otherwise be used for legitimate health care services.  In 2018, improper payments alone—which include things like payment for non-covered services or for services that were billed but not provided—totaled more than $40 billion nationally according to the Government Accountability Office.

“Fraudulent billing by these Acadia/CRC drug treatment clinics, as contended by the government, limits the State’s ability to provide desperately needed addiction treatment services,” said Maureen R. Dixon, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Health and Human Services Region including West Virginia.  “We will continue working with the U.S. Attorney and other law enforcement partners to protect government health programs, taxpayers, and importantly people who depend on these funds for vitally needed treatment.”   

“The West Virginia Department of Health and Human Resources, through its Medicaid Fraud Control Unit, continues to protect the integrity of  healthcare programs and the citizens of West Virginia,” said Bill J. Crouch, Cabinet Secretary of the West Virginia Department of Health and Human Resources.  “I am proud of DHHR’s Medicaid Fraud Control Unit under the leadership of Director Michael Malone and its work with the United States Attorney’s Office Southern District in combatting healthcare fraud and the opioid crisis and as a member of the innovative ARREST Task Force.”

“The Drug Enforcement Administration routinely works in partnership with other agencies to fight the opioid crisis,” said Justin Schoeman, Acting Assistant Special Agent in-Charge of DEA’s Charleston District Office, which covers West Virginia.   “This settlement is just one example of the great results from our collaboration and hopefully it will have a positive effect on the people of West Virginia,” Schoeman added.

The investigation was conducted by HHS-OIG, DEA and MFCU, members of the United States Attorney’s Healthcare Fraud Abuse, Recovery and Response Team (ARREST), an innovative approach linking civil and criminal enforcement efforts together in a comprehensive attack on the opioid epidemic and healthcare fraud.  Assistant United States Attorneys Alan McGonigal and Jennifer Mankins handled the matter on behalf of the United States.  The settlement agreement can be found


United States Attorney Mike Stuart announced the formation of ARREST in February 2019.  This settlement is the first significant result since its inception.  All health care related cases in the Southern District of West Virginia, whether they are the subject of criminal or civil investigation or enforcement, are directed through ARREST.  Included within the purview of the team are the Opioid Fraud and Abuse Detection Unit, Affirmative Civil Enforcement Unit, Appalachian Regional Prescription Opioid Task Force, Medicare and Medicaid Fraud, and Asset Forfeiture efforts related to all healthcare matters.


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Updated May 6, 2019

Health Care Fraud