School drug counselors charged in $46 million fraud scheme

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LOS ANGELES (AP) — Some were students who had tried drugs or alcohol, but didn't have substance abuse problems. Others were young addicts in need of help.

Neither group necessarily fared well under counseling programs run by a Long Beach company for Los Angeles County schools, federal prosecutors said Wednesday. Dabblers were dubbed abusers, and hard-core users didn't always get the care they needed.

The students unwittingly helped the company take in $46 million in a decadelong health care fraud scheme that led to indictments unsealed Wednesday against eight women employees who managed the program, supervised counselors or worked with students.

"Employees engaged in a long-running fraud scheme to steal tens of millions of dollars from a program with limited resources that was designed to help underprivileged youth in recovery," U.S. Attorney Eileen M. Decker said. "The defendants and (the company) branded many innocent young people as substance abusers and addicts in order to boost enrollment numbers and billings."

The now-defunct Atlantic Health Services in Long Beach billed for $50 million in fraudulent Medi-Cal reimbursements for treatment that either wasn't provided to poor middle and high school students, was deficient or was given to students who didn't have drug or alcohol problems, prosecutors said.

Audits failed to detect the crimes because paperwork was falsified, Assistant United States Attorney Cathy Ostiller said. The California Department of Justice received complaints in 2009, but the health care fraud continued until 2013.

She wouldn't say who complained or describe the nature of the complaints. Federal investigators got involved in 2011.

Spokeswomen for the state Department of Health Care Services and the attorney general didn't immediately comment.

The eight women charged did not benefit financially from the scheme, Ostiller said. In some cases, counselors were recovering drug abusers just looking to hold onto their jobs and faced threats of being fired if they didn't falsify paperwork.

"As far as we can tell, most of these employees were minimum-wage earners," Ostiller said. "They were not doing this for luxury yachts."

Whether someone higher up in the company benefited isn't clear, though the investigation is ongoing, she noted.

Efforts to reach Atlantic Health Services or a former company official were unsuccessful.

A dozen others involved in the scheme have already pleaded guilty, including Dr. Leland Whitson, 75, the former medical and clinical director for the company, who diagnosed many of the students as having drug problems. He pleaded guilty to making a false statement affecting a health care program.

Whitson's lawyers didn't return messages seeking comment.

In some cases, students who admitted trying alcohol at a party were diagnosed as abusers. They were then exposed to others with real addiction problems, Ostiller said.

Teachers often did not know the nature of the programs students were receiving, and students were confounded about what they were attending.

"Some kids have told us they didn't even know they were in a substance abuse program," Ostiller said. "Why would they be in a program they didn't need?"

The company billed nearly $30 per student for sessions that often exceeded the limit of 10 participants. In those instances, separate attendance sheets were prepared so groups appeared smaller.

Many of the counseling sessions only occurred on paper, and signatures were later forged.

Six of the eight women were arrested Wednesday morning, and two others were expected to surrender later.

An attorney for one of the defendants did not return a phone call seeking comment.

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