WINDOW ROCK, Ariz. — In a landmark legal challenge, the state of Arizona is accused of complicity in one of the largest Medicaid fraud schemes known to the U.S., involving the exploitation of Native American populations through corrupt addiction treatment providers. Filed in Maricopa County Superior Court, the lawsuit seeks justice and hefty damages for the aggrieved parties, including survivors and estates of the deceased who were subjected to misleading and harmful practices in scam sober living homes and behavioral healthcare facilities.
Leading the case are attorneys John B. Brewer and Dane L. Wood from BrewerWood P.L.L.C., along with McCoy Leavitt Laskey LLC, who unveiled that a systemic negligence by state officials paved the way for fraudulent actors to siphon off $2.8 billion of Medicaid funds over four years. They assert that these fraudulent operations targeted Native Americans with fake promises of housing and therapy, only to divert them into hazardous environments where addiction was not cured but cultivated.
According to the complaint, many victims were deliberately kept under the influence of drugs and alcohol to maintain compliance and billable status under Medicaid, effectively transforming them into profit centers for unscrupulous operators. Internal state documents reportedly show that officials were aware of these malpractices as early as January 2020 but failed to take decisive actions to stem the fraud.
Recent steps by the Arizona Health Care Cost Containment System (AHCCCS) underscore the gravity of the issue. Since May 2023, over 300 behavioral health providers have been suspended based on credible fraud allegations. Moreover, a series of legal actions culminated in December 2023 with a grand jury indicting ten people linked to unlicensed homes. An earlier case in July 2023 saw a Mesa woman pleading guilty to related fraud charges, highlighting ongoing efforts to address systemic abuses.
Despite these responses, plaintiffs argue that the state’s inaction allowed the devastating impact on Native communities to burgeon. Whistleblowers had provided detailed accounts of the scamming practices back in July 2019, including the use of bogus Medicaid claims and trafficking individuals to certain facilities, where billing for behavioral health services catapulted from $53.5 million in 2019 to $668 million by 2022.
The plaintiffs, represented in a class action suit, have experienced not just financial exploitation but a devastation of their communal and personal lives, enduring unnecessary drug dependencies, homelessness, and even death. The legal challenge is rooted in significant statutes, including Arizona’s Wrongful Death Act and federal Medicaid regulations, arguing that the state violated its obligation to protect Medicaid recipients.
This case, which has been requested to be classified as a “complex civil action” due to its broad scope and implications, aims to catalyze systemic reform in state Medicaid oversight. As it unfolds, Arizona leaders, including Gov. Katie Hobbs and Attorney General Kris Mayes, have acknowledged the crisis, yet comprehensive solutions remain to be detailed.
The story above represents a pressing and ongoing legal and moral contest that points to deeper societal issues affecting marginalized communities in Arizona. As it progresses, the eyes of many are locked on how this case might reshape trust and accountability in public systems designed to protect the vulnerable.
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