Behavioral health system's illegal sober home kickbacks endangered vulnerable patients, DOJ alleges

A Massachusetts behavioral health system allegedly pushed thousands of substance abuse patients to choose its services by illegally offering free sober housing at facilities it knew to be unsafe, according to a complaint made public Monday by federal law enforcement.

The U.S. Attorney’s Office for the District of Massachusetts alleged that Brookline, Massachusetts-based Bournewood Health Systems and its business partner First Psychiatric Planners violated the False Claims Act and the Anti-Kickback Statute. It was joined by the Massachusetts attorney general’s office, which alleged violations of similar state laws.

“The government’s complaint today alleges that Bournewood and FPP paid illegal kickbacks to induce vulnerable patients to drive business to their sober home operations,” Joshua S. Levy, acting U.S. attorney for the District of Massachusetts, said in the announcement. “This kickback scheme negatively impacted the Medicare and Medicaid programs financially, and more importantly it jeopardized patients’ health at a vulnerable time in their recovery.”

The defendant companies, operating together as Bournewood, offer adult and adolescent behavioral inpatient care at their main hospital as well as a transitional outpatient Partial Hospital Program across other sites, and these programs were the focus of law enforcement’s scrutiny.

Following a whistleblower complaint filed under seal in 2021 and subsequent government investigation, the government said the defendants had been illegally providing kickbacks “from at least July 2003 through May 2022” in order to increase their daily patient census to bill insurers for more, according to court filings.

Knowing that the government-covered substance abuse patients often could not afford the daily housing rate for a sober home, Bournewood allegedly contracted with nearby sober homes and offered the patients free sober housing “often for up to 10 days or more,” per the filing.

Between September 2013 and May 2022, the government alleged that the companies paid over $1.85 million in illegal kickbacks to sober homes to house over 3,300 patients, about 90% of whom were enrolled in federal plans that paid the defendants over $7.5 million in reimbursements.

In addition to drawing patients away from other behavioral health providers and illegally billing Medicare and Medicaid, the government alleged that the sober homes themselves were “unsafe and threatened patients’ sobriety,” the U.S. attorney’s office said in its announcement.

Those sober homes were operated by the case’s original whistleblower, David Perry, who in 2019 pleaded guilty to and was sentenced to jail for distributing drugs to substance abuse patients in exchange for sex.

The government said patients sent to Perry’s sober homes “made numerous complaints” to Bournewood about Perry’s actions and other poor conditions including bedbugs over a period of 10 years.

“Although the defendants recognized that placing patients at [Perry’s sober homes] inhibited patients’ recoveries, the defendants continued to house patients at [the homes] until they learned of Perry’s possible indictment by the Commonwealth of Massachusetts,” the government wrote in their complaint.

“Massachusetts is no place to take advantage of vulnerable populations, especially those suffering from substance use disorder,” Massachusetts Attorney General Andrea Joy Campbell said in a release. “These entities referred patients to certain unsafe sober homes and jeopardized their healing to support their own revenue. By taking action, my office and the [U.S. Attorney’s Office] are reaffirming our commitment to ensure those seeking help have access to treatment and a safe path to recovery.”