Delaware issues ‘fraud alert’ targeting California addiction treatment – ​​Orange County Register

Alcoholics Anonymous uses sobriety coins that symbolize the time the member has remained sober. (PHOTO BY BRUCE CHAMBERS, ORANGE COUNTY REGISTER/SCNG)

Even though California is a hotbed of fraud, we’ve never seen anything like this. Wow, Delaware.

“SCAM ALERT!” screams Delaware’s social media post. “The Substance Abuse and Mental Health Services Overdose Response Center is warning of a scam in our area where individuals are claiming to be part of residential rehabilitation programs in California, such as Santa Monica Rehab of California.”

“The claims about residential treatment services and continuing treatment in California are likely FALSE CLAIMS,” the Delaware Department of Health and Human Services continues. “Beware of body brokers, cash offers, kickbacks, and insurance fraud. Trusted addiction treatment resources can be found on the Treatment Connection website at www.treatmentconnection.com…. The facilities on this website have been reviewed and verified by the state government in which they are located.”

Business records filed with the California Secretary of State show that Santa Monica Rehab is associated with Nate Young.

As it turns out, Young was sued by Beverly Hills in 2020 for operating an “illegal drug rehabilitation facility” that was “a haven for drug abuse and other criminal activity,” according to the city’s lawsuit. One resident described it as “a place to crash and smoke fentanyl,” where Young provided drugs like heroin and methamphetamines to residents at “significantly discounted prices,” the lawsuit says.

Young was also sued by insurance giant Aetna last year for masterminding a $40 million fraud scheme that “targeted at-risk Aetna members suffering from alcohol and/or drug addiction as part of a concerted effort to profit at their expense,” the lawsuit says. Young and his alleged accomplices “exploited patients to obtain health insurance benefits under the guise of helping them while doing the exact opposite.”

Young’s lawyers called the allegations “fiction” and “seditious speculation” designed to help Aetna avoid paying millions in outstanding debts. Aetna’s “outrageous allegations” caused immense business damage and should be dismissed, they argue in court documents.

While Santa Monica Rehab LLC is not listed as a state-licensed addiction treatment facility in California, Santa Monica Detox LLC is, according to the California Department of Health Care Services. Young is listed as manager and/or CEO for both facilities, according to filings with the Secretary of State.

We asked DHCS why Delaware is issuing fraud alerts for California facilities. Officials are working on a response, they told us, but were unable to meet our deadline.

Marc Williams, one of Young’s attorneys, said Delaware’s announcement “must be viewed in the context of the ongoing litigation that Aetna has brought against subsidiaries of Santa Monica Rehab and Santa Monica Detox. We recently filed a detailed motion to dismiss in this matter that contains a number of important points that demonstrate significant deficiencies in Aetna’s lawsuit.

“My client has been vilified for too long and is very much looking forward to his day in court and the opportunity to restore his reputation by showing how he has helped more than a thousand people get clean, sober and back to work,” Williams said via email.

Aetna’s fight

First, the cast list of characters in the Aetna suit:

In addition to Young, also known as Pablo Lopez, Aetna alleges that the scheme also involved his brother, David Young, also known as Sancho Lopez; Jose Ricardo Toscano Maldonado; Ali Beheshti; Marc Adler; Ani Mirzayan; Zealie LLC; Helping Hands Rehabilitation Clinic, Inc.; Joser Forever LLC; Get Real Recovery LLC; Revive Premier Treatment Center, Inc.; Healing Path Detox LLC; Ocean Valley Behavioral Health, LLC; Rodeo Recovery LLC; Sunset Rehab LLC; Natural Rest House, Inc.; 55 Silver, LLC; and 9 Silver, LLC, according to the lawsuit.

Aetna alleges they “lured patients into their programs by offering them kickbacks in the form of … free or low-cost housing in ‘sober living homes’ in highly desirable locations throughout California. In reality, the ‘sober living homes’ were little more than drug dens designed to ensure that patients stayed in defendants’ treatment programs as long as possible,” the lawsuit states.

To continue to grow, they hired some patients as “body brokers” to find other addicts for their facilities; they enrolled people in good insurance plans to ensure good insurance reimbursements; they created multiple companies with multiple tax identification numbers to avoid fraud detection, the lawsuit says. Young was accused of scouring Alcoholics Anonymous meetings and/or other drug counseling centers for “recently sober individuals.” They were offered jobs or housing in his “‘sober living homes,’ which were rife with drugs, if they allowed him to use their insurance companies to bill for treatment,” the lawsuit says. “Such temptations to recently sober individuals are extremely dangerous and, of course, can lead to relapse.”

In the rare cases where a patient’s treatment progressed while still retaining some benefits, “Young et al. encouraged a ‘relapse’ so that the patient’s programs and benefit payments could begin again,” the lawsuit states.

Aetna is seeking compensatory and punitive damages, reimbursement of attorneys’ fees “and any other relief the court deems appropriate” for alleged fraud, negligent misrepresentation, unjust enrichment and violations of the Racketeer Influenced and Corrupt Organizations Act, to name a few.

‘Fiction’

The defendants have filed numerous motions to dismiss Aetna’s complaint, arguing that the original complaint was insufficiently specific. Aetna filed an amended complaint. They claim that this is still not enough.

“Lawsuits seeking to assert a fiction must fail,” Young’s motion to dismiss states. “If Aetna had had more facts, it would have asserted them… But Aetna did nothing of the sort. Rather, Aetna merely attempted to spin a fictitious theory. That theory – that the young defendants operated a fraudulent scheme rather than legitimate addiction and substance abuse disorder treatment facilities – is based on inflammatory speculation and a desire to avoid paying the young defendants millions of dollars for outstanding, unpaid insurance claims.”

Aetna’s main allegations are based on claims from lawsuits that have nothing to do with it, they argue. The Beverly Hills lawsuit was a civil harassment case involving “only one of the establishments,” and it was settled before the establishment served Aetna members. Criminal corporate brokerage cases occurred before the defendants came on the scene and before Aetna members were served, they argue.

“There are no facts because the young defendants do not tolerate such behavior,” the motion states.

Aetna counters that the detailed information Young seeks is not contained in a complaint but comes later, during discovery. A complaint only needs to adequately set forth the nature of the claim and the grounds on which it is based, a standard that “can easily be met here,” the company told the court.

Young’s arguments are also repeated in separate motions to dismiss filed by other defendants.

“Aetna’s complaint contains no allegations against Revive, but falsely lumps all defendants together,” the complaint states. “Aetna’s allegations against the Revive defendants contain no who, what, when, where and how information required for fraud-based claims. Aetna’s efforts to evade its duty to sue through misrepresentations and mischaracterizations are unsuccessful and unpersuasive.”

The motion states that Zealie is merely a third-party billing provider, and yet “Aetna accuses Mr. Beheshti of a crime based on allegations in an independent indictment in an independent case in which he is not named and which involves an independent entity and the alleged crime of another person.”

No decision yet on motions to dismiss; these things usually take a while. We’ll keep an eye on it. We suspect Delaware will, too.

California? Hello?