Grand jury proposes sweeping sober home industry reforms

A three-month grand jury investigation into corruption in the drug treatment industry — believed to be the first in the country — uncovered evidence of sexual abuse, human trafficking and forced labor in addition to patient brokering and insurance fraud.

The 37-page report proposes 15 sweeping proposals to change laws and increase criminal penalties for the exploitation of addicts seeking recovery in a $1 billion local industry propelled by a nationwide heroin epidemic, Palm Beach County State Attorney Dave Aronberg announced Monday at a news conference.

“I think it’s a very powerful document,” Aronberg said.

The grand jury issued no indictments but Aronberg promised more arrests. Already, his Sober Home Task Force has made eight arrests, all for patient brokering, since its creation in July.

Earlier this year the Legislature gave Aronberg $275,000 to investigate allegations of corruption and propose solutions. Although lawmakers did not require Aronberg to convene a grand jury, he said did so to investigate how government agencies are responding to corruption and recommend ways to improve oversight.

For Aronberg, a Democrat reelected this year to a second term, it is his first “issues-oriented” grand jury report and the first since a grand jury under his predecessor, Michael McAuliffe, called for an inspector general to fight corruption.

The 21-member grand jury identified five areas in need of legislative and regulatory change.

  • Deceptive marketing: “Willful, intentional and material misrepresentations” should be crimes and treatment providers should be held accountable for the conduct of the marketers they hire.
  • Oversight of sober homes: Certification by the Florida Association of Recovery Residences, or FARR, and licensing by the Department of Children and Families for certain types of sober homes should be required. Also prohibiting treatment providers from accepting referrals from uncertified sober homes.
  • Industry fees pay for oversight: Adopt licensing requirements and fees similar to those of other assisted-living residences. Raise the fees to generate more money for DCF to perform inspections and review permits. DCF has 25 workers to oversee 321 licensed drug treatment providers in South Florida, a situation the grand jury found “grossly inadequate.”
  • End patient brokering: Increase penalties for patient brokering to be “reflective of the outrageous profits” made by patient brokers. Also, give the state attorney general and statewide prosecutor the power to assist in patient-brokering cases.
  • Easier access to records: Reduce “impractical privacy restrictions” that hamper investigations and educate law enforcement about state and federal privacy laws. Currently, the law provides an additional layer of protection for the medical records of people with mental illnesses such as addiction.

In making its findings, the grand jury heard evidence from witnesses representing the insurance industry, FARR, first responders and law enforcement, treatment providers and parents of children victimized by patient brokering and insurance fraud.

Aronberg, flanked by U.S. Rep. Lois Frankel, D-West Palm Beach, identified the Affordable Care Act and Mental Health Parity laws as inadvertently creating opportunities for corruption in the industry by expanding insurance coverage. In particular, coverage for pre-existing conditions, children remaining on their parents’ insurance policies until age 26 and covering mental illnesses on par with physical ailments.

“These laws inadvertently created a lucrative opportunity for bad actors to exploit a vulnerable class of young adults suffering from addiction,” Aronberg said, adding that the grand jury concluded the problem is unregulated businesses that house addicts and not the addicts themselves.

“These unregulated businesses not only harm their residents directly but indirectly harm others in recovery by perpetrating a negative stigma,” Aronberg said.

The grand jury narrowed the criminal activity and regulatory violations into three categories: deceptive marketing, insurance fraud and patient brokering. The Palm Beach Post first began reporting on fraud in the industry in August 2015 and recently detailed the toll from heroin-related deaths in a special report Heroin: Killer of a generation.

One deceptive marketing practice explained in the report involves online marketers using Google search terms to “hijack the good name and reputation of notable treatment providers” and route callers to call centers in Florida, where marketers auction them to the highest-bidding treatment center.

As for insurance fraud, the grand jury also heard stories of overbilling for urine drug tests, ordered by doctors who never reviewed the results. Other billed for services never provided or submitted falsely labeled samples.

Witnesses also testified that the average patient referral fee that treatment centers pay to sober homes is $500 a week. Free rent is another illegal perk that treatment centers often pay sober home operators for addicts.

Rent subsidies have been a controversial topic at Sober Home Task Force meetings, with sober home operators arguing that residents fresh out of treatment aren’t ready to work and need to attend outpatient treatment during the day.

The grand jury report recommends that DCF create a new license that allows licensed treatment providers to pay sober home operators up to $200 a week for three months for the addict receiving outpatient treatment.

Asked how he would persuade lawmakers to enact the grand jury’s recommendation, Aronberg replied: “I am going to Tallahassee myself.”

Aronberg, a former state senator, said, “I am going to use my existing relationships in Tallahassee to implore them to review the reports and realize that this is not just a South Florida problem.”

Staff Writer Joe Capozzi contributed to this story.

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