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Life Health Services, a drug rehabilitation clinic in South Los Angeles, took a big hit last fall when state health officials cut its funding and launched a fraud investigation. The clinic had been cited in government audits for client records that appeared to be falsified.
But in a brick office building on the same block, the U-Turn Alcohol & Drug Education Program continues to reap taxpayer money – despite the same kind of violations flagged in its audits.
State regulators have frozen funding to scores of clinics since The Center for Investigative Reporting and CNN uncovered rampant fraud in Drug Medi-Cal, part of the nation’s biggest Medicaid system. The crackdown has hit 88 clinics with 135 satellite sites – including half of Los Angeles County’s centers.
Still, a CIR analysis indicates that about a dozen clinics with similar track records remain open in L.A. County. CIR obtained the names of suspended clinics from sources after months of state refusals to provide the information and compared them with past government audits.
State officials won’t disclose how they chose the clinics they penalized, but they say they aren’t done yet.
“We are uncovering things all the time and working through them,” said Toby Douglas, director of the Department of Health Care Services. “There will continue to be more audits and more actions taken.”
An agency spokesman said some clinics require multiple audits before the state can determine whether to pull funding. In late January, the state suspended six more in L.A. County.
One that remained open until then was The Solutions Alcohol & Drug Recovery Foundation. While operating for six months after the first wave of clinic suspensions, it collected more than $700,000 in state and federal money.
Yet the South L.A. clinic had been exploiting the system for years, according to interviews with 10 former employees. The ex-staffers described routine forgery and said clients were instructed using literature by Church of Scientology founder L. Ron Hubbard.
“I don’t think they should have continued,” said former counselor Cleo Thomas. “They’re not helping anyone.”
Calls to clinic CEO Michael Hudspeth were not returned.
The Rehab Racket investigation highlighted how poor communication between state and L.A. County regulators helped enable fraud to flourish. Since then, the state and county have announced reforms to improve coordination.
If state regulators had reviewed county audits earlier, they would have seen telling signs of trouble at clinics that so far have avoided repercussions – the kinds of transgressions that the CIR/CNN investigation found all too common in a drug rehab system intended to help the poor.
Still-operating clinics with past red flags include:
Even as those clinics continue to bill Medi-Cal, the state crackdown has shuttered so many others that some former counselors wouldn’t talk about their experiences for fear of causing more to close. They said they worried people in need of counseling would have nowhere to go.
But the L.A. County Department of Public Health hasn’t received any complaints and believes the remaining clinics can handle the demand, according to a statement.
In any case, others note that counseling at troubled clinics might not be worth much.
At The Solutions Foundation, for example, some teen clients brought in from group homes were diagnosed with addictions they didn’t have, former employees said. Counseling sessions, they said, often devolved into baby-sitting.
Counselors were directed to invent therapy notes five days a week for clients who showed up only sporadically or not at all, ex-staffers said. The boss “had everybody ghost writing,” Thomas said.
Signatures were then forged to exaggerate attendance, past employees said. Former counselor Micheliah Island said she was asked to forge signatures on reams of daily attendance sheets. Two others recounted hearing a manager brag about being better at signing clients’ names than the clients themselves.
Ex-employees also complained about mandatory Scientology-affiliated training, which included exercises like communicating with modeling clay and staring at another person for extended periods. Javier Melendrez, who worked as a counselor until last fall, said he felt the clinic was pushing religion on staff and clients.
The clinic’s former medical director, Dr. Bambi Nickelberry, said that all clients had substance abuse problems but that “trying to identify addictions is sometimes a little bit tricky.”
As a counselor, Thomas said she did her best to help her clients. But she left disillusioned in 2011. “It made me get out of drug and alcohol counseling,” she said.
Reporter Christina Jewett contributed to this story. It was edited by Amy Pyle and copy edited by Nikki Frick and Christine Lee.