A California lawmaker has scheduled a hearing to examine disclosures of significant fraud in taxpayer-funded drug rehabilitation by The Center for Investigative Reporting and CNN.
Dr. Richard Pan, chairman of the Assembly Health Committee, wants to know how the problem persisted for so long, even as state health authorities expanded their efforts this week to shut down questionable clinics.
"A lot of people seemed to know what was going on, but for some reason, they didn't seem to be acting on what was going on," said Pan, a Democrat who represents the Sacramento area. "It seemed like it was hiding in plain sight."
A yearlong investigation by CIR and CNN found widespread fraud and poor oversight in the state's alcohol and drug counseling program for the poor, called Drug Medi-Cal. It is part of the nation's largest Medicaid program.
In the wake of that investigation, another California lawmaker has called for an independent audit into the troubled program. Los Angeles County officials also are proposing reforms aimed at tightening clinic oversight.
Some clinics say they've done nothing wrong
Some of the clinics, however, are fighting back. Several of those temporarily suspended by the state are filing appeals.
"These people have done nothing wrong," said Arthur Barens, a Los Angeles attorney who is appealing the suspensions of several clinics. "They have not shown us any evidence of wrongdoing. I think that offends any concept of due process."
Pan said he will examine the issue during a hearing on Medi-Cal oversight already scheduled for September. "I'm hoping first to identify where the gaps are that allow the Drug Medi-Cal fraud to happen," he said. "Basically, what broke down?"
State Sen. Ted Lieu, a Democrat who represents parts of Los Angeles County, called for an independent review of the rehab program by the state auditor.
"I want to know ... what can we do to change laws or regulations so the fraud doesn't occur in the future," Lieu told CNN on Tuesday.
He said he was motivated by his belief in rehabilitation programs as a crucial tool for reducing crime and the prison population.
"I became very concerned," Lieu said, "that if we don't fix this fraud immediately, it would undercut the public support for this entire program."
State agency widens crackdown this week
The state agency responsible for policing the rehab clinics, the Department of Health Care Services, widened its crackdown this week, announcing Friday it had temporarily suspended 46 clinics with 62 satellite counseling sites -- raising its previous total of suspended clinics by 13. The department won't disclose which clinics have been targeted.
Department spokesman Norman Williams pledged that the dragnet would be expanded even further.
"We're going to make sure people who have defrauded the program are punished," he said on Bay Area public radio station KQED on Tuesday. "You can expect penalties, you can expect jail time and the top thing you can expect is a refocus, a stronger focus on making sure that these things are not happening in the future."
On Wednesday, the state Department of Justice said 36 clinics so far have been referred for investigation.
One client of Barens confirmed that her two South Los Angeles rehab clinics, Changing Steps and Pom-Pom's Castle, were suspended. The state's suspension letter stated that Belinda Baker's clients do not meet requirements for receiving services -- implying that they might not be addicts.
"Every single person we have (has) an addiction problem," Baker said. "They're condemning us without really investigating us."
Baker said another suspended clinic might be the source of her problems. She said a county auditor recently informed her that Able Family Support -- a clinic run by a man with a 2000 organized crime conviction in Texas -- was billing for clients she was serving.
"That place is billing the same people we're billing, and they're sitting right here in group," Baker said. "We're getting caught up in something, and I don't even know what's going on."
Able Family's executive director, Alexander Ferdman, did not respond to a phone call. County authorities have been trying to determine why reporters observed no more than 30 people enter Ferdman's clinic during a stakeout in April. The clinic later billed for seeing 179 clients that day.
Group therapy patient: 'All you can do is pray'
Jerome Sanders, 53, said he's gone to group therapy sessions for a year at Baker's Changing Steps clinic.