Sober living scheme: Dept. of Justice investigating ongoing Medicaid fraud impacting Native Americans

PHOENIX - There's more fallout from Arizona’s massive Medicaid scandal.

At last check, an estimated $2.5 billion was allegedly stolen by bad actors who took advantage of vulnerable people battling addiction, in order to bill the state for nonexistent services.

Now, we are learning that the U.S. Department of Justice is looking into the matter.

In a statement, officials with the DOJ pointed to ongoing criminal investigations. The statement reads, in part:

"Our office obtained treatment and billing records from certain entities that billed AHCCCS. Pursuant to an order issued by a federal judge, our office provided notice to beneficiaries whose records we obtained."

A link at the bottom of the letter directs people to a page on DOJ's website that lists pending criminal cases and hearings for defendants accused in AHCCCS fraud investigations.

Scandal affecting Native Americans across the state

Jamie Kee is all too familiar with the scandal. Not only has it cost billions of dollars in fraud, but the livelihood of relatives across the state.

"I have family members that were victims of these scams, and I don't want to be a part of that," said Kee.

Kee has been vigilant against recruiters in a scheme that preys on people enrolled in the American Indian Health Plan within Arizona’s Medicaid agency, AHCCCS. Per a letter Kee received from the Department of Justice a month prior, her AHCCCS ID number was "identified in connection with an investigation of potential billing fraud connected with substance abuse treatment."

"I've never been in any facilities, and I know the whole scam going on," said Kee. "I've never been to any substance abuse treatments. Nothing like that ever in my life."

The letter went on to say that Kee’s records were disclosed to the DOJ and the U.S. Attorney’s Office for the District of Arizona, obtained through a court order.

"Of course, you know, I'm gonna panic. Like, ‘what did I do?’" Kee said. "I know I didn't do anything, and so I opened the letter immediately, and once I read what was going on, I was shocked."

One woman, who does not want to be identified, told us that her son received the same letter.

"He's only eight," the woman said.

The woman's son has never received any substance abuse treatment. The woman said they stayed in a sober living home while she took classes at a behavioral health facility. That facility has been suspended by AHCCCS due to fraud allegations.

"I don't understand why he would have got billed," the woman said. "They never told me that my kids are gonna get billed."

Groups raising awareness on sober living schemes

Since May 2023, AHCCCS suspended payments to 257 behavioral health providers for open fraud investigations by law enforcement. Recently, Native American groups marched from the state’s Department of Health Services to the AHCCCS headquarters to raise awareness that the sober living scheme still exists.

Reva Stewart, an advocate for the group Stolen People, Stolen Benefits, said the DOJ’s letter can trigger victims.

"A lot of them said that they thought they were gonna have to pay back this money, and it was directed to them exclusively," said Stewart.

We requested an interview with AHCCCS regarding the letter and potential new trends in Medicaid fraud, but a spokesperson was not able to make that happen in time for our deadline on this story.

"I did try to contact AHCCCS," said Kee. "I just get the runarounds, but you know I am taking this seriously."