2 addiction treatment center owners indicted after reaping $50 million

June 27, 2018
In this undated image from video, Ken Bailynson, foreground, stands in the parking lot at Green Terrace Condominiums. (Photo provided)

Federal prosecutors unsealed indictments on Wednesday charging eight people — sober home and drug treatment owners, employees and a doctor — with health care fraud and money laundering in two of the highest profile investigations in the crackdown on corruption in South Florida’s drug treatment industry.

Kenneth Bailynson, owner of the defunct Good Decisions Sober Living in West Palm Beach, and Eric Snyder, owner of Real Life Recovery and Halfway There, both face more than 20 years in prison and forfeiture of millions of dollars and dozens of condominiums and homes if convicted of bilking insurance companies out of more than $50 million for bogus urine drug tests for addicts.

The FBI raids at Bailynson and Snyder’s businesses in late 2014 grabbed headlines and were the first in an ongoing multi-agency federal crackdown on patient brokering and insurance fraud called Operation Thoroughbred.

Eric Snyder after giving a deposition in the case of a family whose daughter died after she relapsed and was kicked out of Snyder’s sober home and taken to a motel. The FBI raided Snyder’s sober home in December 2014. (Allen Eyestone / The Palm Beach Post) Photo: Palm Beach Post Staff Writer

Bailynson, known for his explosive temper, psychiatrist Dr. Mark Agresti, Stephanie Curran and Matthew Noel, employees of Good Decisions, bilked more than 80 insurance companies out of $31.3 million in bogus drug tests, according to the indictment.

The charges span four years and detail how Bailynson operated his sober home as a cover for a full-service drug testing empire complete with its own lab, a doctor to write prescriptions for drug screens and condominiums to house addicts with insurance.

According to the indictment, Bailynson bought more than two dozen condos in Green Terrace, a dilapidated complex at 2800 Georgia Ave. in West Palm Beach. He offered insured addicts free rent in exchange for their urine and their commitment to attend drug programs where Bailynson received kickbacks from the operators for each addict he enrolled, the complaint says.

Bailynson, Noel, Curran and four unindicted co-conspirators also paid kickbacks to recruiters to bring insured addicts to Good Decisions for housing. Bailynson hired Dr. Agresti, a West Palm Beach psychiatrist well-known in the drug treatment community, as his medical director.

Agresti, in turn, wrote prescriptions for urine drug screens that were not medically necessary and did not use the results to determine appropriate treatment, according to the indictment.

A Palm Beach Post investigation in 2015 detailed how Bailynson took over the condominium complex and turned it into an armed camp, where guards with guns made sure addicts did not leave and nosy residents minded their own business. By the time the FBI raided Good Decisions in September 2014, Bailynson had converted the pool clubhouse into a urine collection site and banned unit owners from entering.

Urine testing is a staple of drug treatment, a fast way to track relapse and gauge use of prescribed drugs. It’s also cheap. Corner drug stores sell $25 tests that will immediately indicate the presence of a drug. However, unscrupulous treatment operators hire doctors to prescribe more complex — and costly — tests that reveal not only the presence of a drug, but how much is in the addict’s system.

Addiction treatment bonanza: How urine tests rake in millions

The urine of addicts living at Good Decisions was tested at least three times a week. In all, Bailyson’s businesses billed insurance companies for more than $106 million worth of drug tests. The insurance companies paid out $31.3 million.

The other indictment unsealed on Wednesday accuses Eric Snyder, owner of the defunct Halfway There and Real Life Recovery sober home and treatment center in Delray Beach, Paul Materia, Joseph Lubowitz and Christopher Fuller with running a similar operation that raked in $20.1 million from insurance companies for urine drug tests.

Snyder and Fuller were both arrested in July 2017. In a 26-page federal complaint, Fuller was described as a “junkie hunter” hired by Snyder to provide addicts who had insurance for his sober homes and drug treatment center. The document described how Snyder bribed patients with airline tickets, cash, rent and visits to strip clubs. Fuller trolled AA meetings and “crack” motels to find patients, the complaint said.

But prosecutors agreed to hold off on indicting Snyder and Fuller as they tried to negotiate a plea deal with both men. After months of delaying the case, prosecutors went ahead and convened a grand jury, which issued an indictment on June 7.

Musclebound millionaire: How Eric Snyder made his fortune

The indictment describes a multi-state business operation that ensured Snyder’s halfway homes and drug treatment center were full. Lubowitz recruited addicts from his treatment centers in New Jersey and was paid a commission for each addict he admitted to Snyder operations.

Patients’ signatures were forged on sign-in sheets, forms were backdated and fraudulent documents created to make it appear absent patients had attended treatment, according to the indictment. Insured addicts who tested positive were rarely evicted and often urine was collected but not tested. Uninsured addicts were given less costly drug tests, according to the indictment.

Materia ran Snyder’s businesses and was responsible for billing insurance and overseeing lab technicians at the on-site laboratory. In all, Snyder billed insurance companies $58.2 million for urine tests and treatment.