CRC Health Corp. (operating as New Life Lodge)
Outcome
CRC Health Corp. paid $9.25 million to the United States and the State of Tennessee to resolve False Claims Act allegations that its New Life Lodge facility billed TennCare for substance abuse therapy services not rendered, employed unlicensed therapists, failed to maintain required psychiatrist availability and staffing ratios, and double-billed Medicaid for prescription medications.
Details
CRC Health Corp. / New Life Lodge — Substandard SUD Treatment and Medicaid Fraud (2014)
Outcome: CRC Health Corp. paid $9.25 million to the federal government and the State of Tennessee to resolve False Claims Act allegations that its New Life Lodge facility billed TennCare for therapy services not actually provided, used unlicensed therapists, violated required staffing and bed-capacity limits, and double-billed for prescription medications.
CRC Health Corp., headquartered in Cupertino, California, was at the time of the conduct one of the largest for-profit providers of substance abuse and mental health treatment services in the United States. Its New Life Lodge facility in Burns, Tennessee provided residential SUD treatment to adult and adolescent Medicaid patients.
Between 2006 and 2012, New Life Lodge billed the Tennessee Medicaid program (TennCare) for substance abuse therapy services that were either not provided at all or were provided by therapists who were not properly licensed by the State of Tennessee, as required for Medicaid reimbursement. The government further alleged that the facility failed to make a licensed psychiatrist available to patients as required by Tennessee Department of Mental Health regulations, creating a patient care gap while simultaneously billing for comprehensive treatment.
New Life Lodge also failed to maintain the patient-to-staff ratios required under Tennessee regulations and billed for Medicaid patients in excess of the state-licensed bed capacity — meaning some patients may have been treated in unlicensed overflow settings. Additionally, the facility double-billed Medicaid for prescription substance abuse medications dispensed to residents, submitting claims through both the pharmacy benefit and the residential treatment benefit for the same medications.
The violations were first raised by Angie Cederoth, a former employee in New Life Lodge's billing department, in a qui tam lawsuit under the False Claims Act. Cederoth received $1,526,260 as her whistleblower share of the recovery. The settlement was announced in 2014 by the U.S. Department of Justice and the FBI's Memphis Field Office.
Primary Source: Tennessee Substance Abuse Treatment Facility Agrees to Resolve False Claims Act Allegations for $9.25 Million — DOJ Office of Public Affairs
How Crucible Prevents This
Crucible staffing compliance hooks would flag therapist licensing lapses at the point of scheduling and billing. A credential-expiration alerting module would prevent billing under the NPI of an unlicensed provider. Crucible's bed-census monitoring controls would detect billing submissions exceeding the state-licensed bed capacity. Double-billing detection logic comparing pharmacy claims against clinical encounter claims would catch the duplicate medication billing. Required psychiatrist availability compliance tracking would alert management to staffing gaps before they produced billable non-encounters.
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