Arizona’s Medicaid program has been hit with a significant indictment involving 20 individuals, a mental health company, and a church, all accused of a complex fraud scheme amounting to $60 million. This scandal is part of ongoing efforts to tackle illegal operations in sober living facilities across the state. More details can be found in the original report.
According to the indictment released on Tuesday, Happy House Behavioral Health LLC allegedly received payments for mental health services and addiction treatments that were either never rendered or incomplete. The charges further claim billing was submitted for clients who were deceased or imprisoned.
The scheme reportedly included cooperation between sober living homes and the behavioral health business, where Arizona Health Care Cost Containment System funds were improperly redirected to pay these homes, violating state regulations.
Among the serious allegations, Happy House Behavioral Health is accused of money laundering, evidenced by a $5 million payment to Hope of Life International Church in July 2023, followed by a $2 million wire transfer to Rwanda.
Charges against Happy House Behavioral Health cover conspiracy, fraud, forgery, theft, and money laundering.
The Associated Press has reached out to the legal representative of Happy House Behavioral Health but has yet to receive a response.
Hope of Life International Church, in a statement, contested the money laundering accusations, asserting that the donation from a tenant, a licensed sober living facility, was accepted in good faith. The church maintained it had no insight into the facility’s internal operations or fiscal decisions. “The church’s only relationship was that of a landlord and, later, as a recipient of a donation — a donation accepted in good faith, consistent with its mission and longstanding practice,” the statement said.
This case is one of many led by Attorney General Kris Mayes, targeting Medicaid fraud and unauthorized sober living facilities. These operations often prey on tribal community members, as detailed here. As a result, over 100 providers have seen their payments suspended.
The fraudulent activities have displaced numerous Native Americans, particularly Navajos, from sober living homes, resulting in increased homelessness in Phoenix. Navajo officials report that individuals were sometimes transported in unmarked vans from distant areas within the Navajo Nation, which encompasses northern Arizona, New Mexico, and Utah.
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