TRENTON – The State Commission of Investigation has its sights set on problems in the addiction rehabilitation industry – from self-dealing to double billing to rigging drug tests to keep people from leaving treatment.

The SCI’s final report and legislative recommendations are still months away, but the Legislature’s independent fact-finding agency held a public hearing Tuesday at the Statehouse to lay out its findings to date.

Mostly, the hearing featured SCI investigators, pre-recorded videos in which the voices of witnesses were distorted to protect their identities and an invited guest. One witness who was subpoenaed to appear did not show, part of his last-minute fight to avoid testifying.

Vulnerable are victimized

SCI chairwoman Tiffany Williams Brewer says addiction treatment is a $42 billion and growing industry in the United States with little regulation, making it easy for vulnerable people to be exploited.

“Many addicted individuals and their families are victimized by the very system that’s supposed to help them recover and rebuild their lives,” Williams Brewer said.

State Commission of Investigation chairwoman Tiffany Williams Brewer (Screenshot from NJ Legislature video)
State Commission of Investigation chairwoman Tiffany Williams Brewer (Screenshot from NJ Legislature video)
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The SCI said the business model for some treatment centers is to keep patients in a cycle of addiction, treatment and relapse so they can maximize profits from private insurers – and that it leaves people with public insurance or no coverage treated as second-class patients.

'Cash for bodies'

The questionable practices – including patient brokering that SCI special agent Eric Rennert described as ‘cash for bodies’ – are generally limited to how they handle patients with private insurance, which is far more lucrative than those on Medicaid.

A state law enacted last year bars patient brokering, in which people needing addiction recovery treatment are steered to specific treatment centers in exchange for a financial payoff. But Rennert said that law is being circumvented through donations and sponsorships that continue to provide a financial benefit from patient referrals.

“Recovery coaches are sending clients with private insurance to treatment centers which may not adequately provide the necessary care they need but instead are encouraging them to go there because that’s where the money comes from,” Rennert said.

SCI special agent Eric Rennert (Screenshot from video on NJ Legislature website)
SCI special agent Eric Rennert (Screenshot from video on NJ Legislature website)
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Rennert detailed the example of Recovery Advocates of America, based in Hamilton. More than 35 treatment centers donated over $600,000 to it combined between 2017 and 2020. Clients with insurance were in turn referred to them, sometimes with plane tickets to centers in Florida.

In video testimony in which a patient’s voice was distorted to provide anonymity, one person with a cocaine addiction said he was instructed to drink vodka and use crack in order to be admitted to a hospital bed for drug treatment.

Rigging drug tests – to fail them, not pass

Other patients were made to appear like they had used drugs to keep the insurance money coming, said investigative agent Karen Guhl.

“Based on information we received from employees of these treatment facilities, they were instructed to tamper with the urine specimens of the clients to provide false positive results,” Guhl said. “This would be indicative of a relapse and would then set the patient up for additional days of treatment at a higher level of care.”

SCI investigative agent Karen Guhl (Screenshot from video on NJ Legislature website)
SCI investigative agent Karen Guhl (Screenshot from video on NJ Legislature website)
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SCI employees also testified about glaring irregularities in medical billing, which forensic accountant Laura Mercandetti said gets used so that insurance money can funds lavish lifestyles for some providers.

“Overbilling for services, billing for services that were never rendered and billing for overlapping services,” Mercandetti said. “And all of these questionable billing practices enable the owners to make millions of dollars.”

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The SCI specifically detailed practices at Kingsway Treatment Center in Mullica Hill, which investigators said billed insurance for $15 million in three years with around 30 to 40 clients at a time. They said money got transferred into the private accounts of its owner and his wife, disguised as nontaxable business loan repayments, and to affiliated sober living homes that cannot bill insurance.

Kingsway’s owner, Nicholas DeSimone, didn’t testify at the hearing despite receiving a subpoena, which he is now trying to quash in court. The SCI said it will continue to seek his public testimony.

Michael Symons is the Statehouse bureau chief for New Jersey 101.5. You can reach him at michael.symons@townsquaremedia.com

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