Arizona Medicaid: Two clinics, one owner. Why AHCCCS suspects them of billing fraud
Arizona clinics face $4M billing fraud allegations
Suspension notices detail allegations of improper client transfers, conflicting clinician timelines, and patient brokering at two Arizona clinics. FOX 10's Justin Lum reports.
PHOENIX - FOX 10 Investigates continues to report on what the Arizona attorney general calls the biggest government scandal in state history.
Arizona’s Medicaid agency, AHCCCS, has been defrauded out of an estimated $3 billion in a scheme targeting vulnerable people fighting addiction — a majority of victims were Native American.
It didn’t take long to realize that no one at Shining New Light, LLC wanted to talk to FOX 10. Someone at the front desk was seen walking to the back of this counseling facility where a few other people sat around. Meanwhile, the door was locked and no one answered the phone during business hours. An automated message stated, "Thank you for calling Shining New Light Therapy and Wellness Center."
This wasn’t the first time FOX 10 reached out to Shining New Light. Shining New Light is a licensed behavioral health outpatient facility advertising services like therapy and psychoeducation. The treatment center takes private health insurance and Medicaid, specifically the American Indian Health Plan provided by AHCCCS. In early September, AHCCCS suspended payments to Shining New Light due to credible allegations of fraud.
The notice of suspension says the provider billed "impossible hours" for dates of service and misrepresented time, billed for a higher degree of care than authorized, billed for incarcerated members, and submitted claims that overlapped with other outpatient facilities. These are billing concerns that aren’t new to AHCCCS.
What they're saying:
"I know of providers that were concerning to me back in 2020 that are not on any kind of exclusion or suspension list that are still active. And I have no idea whether or not a full investigation was done," said Dr. Satya Sarma, former medical director for AHCCCS from 2019 to 2021.
Dr. Sarma says she sounded the alarm during the COVID pandemic regarding the quality of care for members in the American Indian Health Plan, but that AHCCCS waited too long to act.
The state finally launched a massive crackdown in May 2023. AHCCCS has now suspended 300 providers and says 11,000 victims have been served. Prior reporting showed that during the height of the crisis, vulnerable people went missing and even died living in unlicensed sober homes. Patients did not receive legitimate treatment, and in some cases, were enabled to abuse alcohol and drugs.
Shining New Light was suspended the same day as Karing Heart, LLC on September 2, 2026. State records show both clinics are linked to the same owner, Kandace Wadlington. AHCCCS suspension letters reveal a nearly identical pattern of allegations that include switching non-Native American members to the American Indian Health Plan.
"There really wasn't a system back then for access to confirm that people registering under AIHP were actually members of the Native American community in Arizona of one of the 22 federally recognized tribes," Sarma said.
FOX 10 Investigator Justin Lum reports on an ongoing Medicaid fraud scheme that has siphoned an estimated $3 billion from Arizona's health care agency, targeting vulnerable individuals in addiction treatment.
Dig deeper:
Shining New Light and Karing Heart are also accused of "ghost billing" for the same clients between both facilities, and offering remuneration.
Sarma explained, "So that's where the concept of brokering comes in. It isn't legal for someone to go out on the street and tell someone, hey, come here. I'll give you this treatment. Here's 50 bucks. And then I'm going to go bill AHCCCS or another government agency for this care. That is illegal."
It’s also known as patient brokering, offering money for clients. Both facilities are also accused of fraudulently billing under a licensed behavioral health professional identified as Erika Collins-Frazier, who said she stopped signing documents or providing services after Sept. 14, 2023, according to suspension letters. Arizona Department of Health documents verify that statement was made to officials in April 2024.
Karing Heart was fined $5,000 for failing to ensure counseling services were provided by a behavioral health professional and that behavioral health technicians were given clinical oversight every two weeks. Dr. Sarma questions why it took two years for a suspension.
"We need to dig in deeper to understand the timeline, but on the face of it, it is a bit concerning to me that this issue was flagged within our public health system, within our agencies in 2024, and this letter is being issued, what, within the last week?" Sarma said.
Meanwhile, Collins-Frazier is shown on Karing Heart’s website. She declined to interview but stated that she’s never worked for Karing Heart. So why is she on the website? She also stated she only provided clinical oversight for Shining New Light from May 2024 to April 2026. It’s a clear discrepancy in the timeline, conflicting what health officials say. Collins-Fraizer said she would be contacting AHCCCS immediately.
By the numbers:
As both Shining New Light and Karing Heart have been accused of billing fraud, the news team wanted to know how much money AHCCCS has paid both clinics for services claimed. From 2022 until being suspended, Shining New Light made $3,272,372. As for Karing Heart, AHCCCS paid out $698,029 between 2025 and the suspension earlier this month. Both facilities totaled almost $3,970,401 in reimbursements paid.
The owner has not responded to requests for comment. Dr. Sarma believes there is a disconnect between the state’s Department of Health and Medicaid agency, despite working in the same building.
"At this point, it is very difficult to be sure that we have a safe and effective oversight of the system, and I really feel that can't happen without accountability and oversight at AHCCCS," Sarma said.
What's next:
Both providers have not responded to requests for comment. AHCCCS has referred the two cases to Arizona Attorney General Kris Mayes.
The Source: Information in this report was gathered from Dr. Satya Sarma, former medical director for AHCCCS; Erika Collins-Frazier; state records; Arizona Department of Health documents; and AHCCCS suspension letters.