News release

Palm Beach Post exposes sober-home epidemic, earns national journalism award from Coalition

1/10/2018

Insurance fraud drives wave of bogus sober homes, rehab and testing

WASHINGTON, Jan. 10, 2018 — Sober homes plied recovering addicts with drugs so they’d relapse and keep being trafficked for inflated urine testing and rehab illegally charged to insurers.

The deadly epidemic driven by insurance fraud in South Florida was widely exposed by the Palm Beach Post. The news coverage sparked state and federal reforms that will help control scams.

Those investigative achievements earned the newspaper the inaugural Excellence in Journalism Award from the Coalition Against Insurance Fraud. The award was presented at the Coalition’s recent annual member meeting in Washington, D.C.

The Post assigned teams of top reporters to investigate the sober-home epidemic. They wrote stories for more than two years — including more than 100 stories in 2016.

Insurance fraud drove the crime wave, the Post discovered. Likely hundreds of millions of dollars in crooked claims poured into insurers.

Sober homes were lightly regulated $1-billion industry. Nearly anyone can set up facilities with little oversight or standards of care, the Post wrote. Criminals routinely gave drugs to recovering addicts, sparking relapses. The struggling addicts were trafficked to urine-testing labs and rehab facilities. They paid patient brokers lucrative kickbacks for the referrals.

Recruiters also brought in people off the streets, whether they needed testing and rehab or not. Even senior citizens were tested for cocaine and angel dust. A simple cup of urine was insurance-billed up to $36,300 for testing.

Insurers were plied with inflated claims, often for phantom rehab services. Addicts were dying from overdoses, often from heroin. In one news feature that earned statewide attention, the Post ran photos of more than 200 people who died from heroin overdoses in Palm Beach County — all in just one year.

Kenny Chatman pimped out female addicts to boost his sober home’s revenues. He also kept addicts virtually imprisoned. He boarded up windows, locked doors and took away residents’ cell phones while handing them drugs to spur insurance-driven relapses.

Law enforcement responded with a statewide crackdown, arresting at least 30 suspects in just one year. Chatman received more than 27 years in federal prison.

A state grand jury issued a major report that outlined the large scope of patient trafficking and insurance fraud in the sober-home industry. Especially important, the grand jury recommended more state and local oversight of sober homes.

State lawmakers also imposed stronger fines and jail terms for trafficking in the deadly addictive drug called fentanyl. Other bills required better screening of overdose patients in hospitals.

Federal regulators opened up sober homes to tighter oversight by local cities.

Young addicts with no background in healthcare come to Florida to get sober. They end up creating sober homes themselves when they learn about the income potential from insurance fraud. They study the business models. They also study health-insurance policies to learn which are best to defraud.

“These kids know more about insurance policies than you ever will,” Post reporter Christine Stapleton said in a presentation at the Coalition’s member meeting.


CONTACT:
Dennis Jay, executive director
202-393-7333; dennisjay@InsuranceFraud.org

James Quiggle, director of communications
202-393-7331; jamesq@InsuranceFraud.org