The U.S. Government has intervened in a whistleblower lawsuit against a non-profit chain of drug treatment centers in New York City over an alleged Medicaid fraud scheme, expanding an investigative case that was initiated in October against Narco Freedom Inc.

Six former employees of Narco Freedom, a network of 21 nonprofit substance abuse treatment homes, brought forth claims that the company engaged in a variety of Medicaid fraud schemes, including providing excessive services, kickbacks and insurance fraud.

The whistleblower lawsuit alleges Narco Freedom owners misallocated tens of millions of Medicaid dollars to sustain extravagant lifestyles, purchasing luxury cars and expensive homes.

The alleged Medicaid fraud scheme also involved Joining Hands Management Inc. and individuals involved in both companies, according to the government.

Narco Freedom was founded in 1971 and provides a multitude of services including substance abuse programs, medical, mental, and social services for over 35,000 people.

Operating what are known as “three-quarter houses,” or “Freedom Houses”, individuals undergoing treatment are offered housing and are required to enroll in outpatient programs run by Narco Freedom, according to the whistleblower lawsuit.

Narco Freedom allegedly swindled Medicaid by coercing patients to remain in treatment as well as submitting exaggerated claims.

“Narco Freedom then bills Medicaid for the outpatient program services that are a condition of residency at its Freedom Houses,” the lawsuit said. “As a result of this illegal kickback scheme, Narco Freedom has received tens of millions of dollars in Medicaid funds.”

The Medicaid fraud lawsuit comes on the heels of New York Attorney General Eric Schneiderman’s announcement that the organization’s top executives are facing multiple counts of fraud and larceny charges.

In March 2015, New York state had indicted Narco Freedom executives on charges of stealing $27 million from Medicaid, an expansion of earlier charges of real estate kickbacks and insurance fraud.

In fact, it is estimated that the organization annually tapped 10 percent of Narco Freedom’s annual Medicaid billings for themselves through a number of Medicaid fraud scams including:

Insurance Fraud: Narco Freedom provides transitional housing, called Freedom Houses to over 1,500 homeless New Yorkers but has linked eligibility to reside in its Freedom Houses to participation in its treatment programs, an illegal process that the organization was previously cited for.

Additionally, the Freedom Houses provided no clinical services to residents, and the houses’ staff had no clinical training.  The residences themselves were not regulated by any local, state or federal agency, and the conditions were deplorable, the government says.

Essentially, Narco Freedom has committed insurance fraud by allegedly operating unregulated residential treatment programs, in violation of various Medicaid rules.

Kickbacks: Narco Freedom, under its CEO’s direction, allegedly made monthly kickback payments to Joining Hands, which ran its own sober houses, according to the government.

In exchange, Joining Hands referred their residents to Narco Freedom’s outpatient programs and enforced attendance, billing Medicaid for treatments received by Joining Hands residents.

Excessive Services:  Narco Freedom allegedly falsified medical records for patients in its outpatient programs, according to the complaint. The government claims the organization paid it employees to create false records, including treatment plans and progress notes for patients they had not treated, as well as to back-date medical records for program services that had allegedly been rendered months or years earlier.

The company then billed Medicaid for services based on those false records, according to the DOJ.

Filing a Medicaid Fraud Whistleblower Lawsuit

In a whistleblower lawsuit also known as qui tam lawsuit, like the one involving Narco Freedom, an individual with knowledge of an organization’s activities provides information about Medicare or Medicaid fraud, corruption or other illegal activity.

Whistleblowers are often employees, former employees and others who have access to company documents and internal information.

Whether you have evidence of Medicaid fraud against the government or corruption at a private company, an experienced whistleblower attorney can investigate your claim and advise you on your legal options.

The Narco Freedom Qui Tam Lawsuit is Case No. 1:12-cv-03674, in the U.S. District Court for the Southern District of New York.