CRC Substance Abuse Treatment Facility in Tennessee Settles False Claims Act Lawsuit for $9.25 Milli

May 15, 2014 — The Medicaid program is funded with federal and state tax dollars to provide needed health care for our nation’s underserved. Medicaid fraud by unprincipled health care providers just drains the program and hikes up health care costs for everybody. The U.S. government counts on whistleblowers to collaborate with the government to end fraudulent health care schemes by filing a False Claims Act lawsuit. The qui tam provisions in the Act offer the means for insiders to do the right thing. Tipsters who file a claim on the government’s behalf may receive a substantial share of any proceeds from the lawsuit.

Whistleblower in Medicaid Fraud Case Was Former Inside Employee in Billing Department

CRC Health Corp. (CRC) — a California company that provides treatment nationwide for substance abuse and mental illness — has settled a qui tam lawsuit alleging that one of CRC’s facilities in Tennessee filed false claims to Medicaid when it sought reimbursement for substandard care provided to Medicaid patients with alcohol and drug addiction related health problems. CRC reportedly will pay $9.25 million to resolve the False Claims Act lawsuit. Angie Cederoth, a former employee in the Tennessee clinic’s billing department, will receive $1.5 million as her portion of the government’s recovery.
The CRC facility named in the lawsuit is New Life Lodge, a residential substance abuse treatment clinic in Burns, Tennessee. From 2006 to 2012, New Life Lodge allegedly engaged in a variety of misconduct, including the following:
  • Billing TennCare, the Tennessee Medicaid program, for substance abuse therapy services that either were not administered or were administered by therapists without a proper Tennessee license;
  • Billing for treatment of Medicaid patients that exceeded in number the state-licensed bed capacity at New Life Lodge;
  • Double-billing Medicaid for prescription medications for substance abuse provided to clinic residents;
  • Failing to offer patients the services of a licensed psychiatrist, in violation of state regulations; and
  • Failing to observe patient-staffing ratios mandated by the Tennessee Department of Mental Health.

Insiders Notify the Government about Double Billing and False Claims

Health care insiders, particularly those like the whistleblower in this case who worked in the billing department, are often the first to root out Medicaid fraud. Still, most informants are unsure about how to file a whistleblower claim. With qui tam lawyers in Los Angeles, Dallas and the Washington D.C. area, Waters & Kraus guides tipsters through the process, making sure their interests are protected. Contact us by email or call our False Claims Act attorneys at 855.784.0268 to talk about collaborating to fight health care fraud.

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