Connecticut drug rehab center pays $1.3M to settle claims


New Era Rehabilitation Center agreed to settle allegations it fraudulently billed Medicaid for services to patients fighting methadone addiction. A Connecticut-based substance abuse treatment facility has agreed to pay $1.37 million to settle claims it defrauded the Medicaid program.

The agreement by the Connecticut Attorney General’s Office and the U.S. Attorney’s Office of the District of Connecticut with New Era Rehabilitation Center would resolve allegations the business violated the state and federal False Claims Act. But it first requires judicial approval.

“We must ensure that taxpayers’ health care dollars used for substance abuse treatment are properly spent,” U.S. Attorney for Connecticut John Durham said in a statement after the parties settled the case April 27. “Medical practices and physicians who treat patients for substance abuse must bill their services accurately and honestly. Health care providers who submit false claims to federal health care programs will be held accountable.”

The case is pending before Judge Vanessa Bryant after prosecutors filed a federal lawsuit in the U.S. District Court for the District of Connecticut in Hartford Tuesday.

The government alleges New Era double-billed Medicaid for services to patients fighting methadone addiction. It claims the rehab center got paid a weekly “bundled rate” that covered intake evaluations, on-site drug abuse testing and monitoring, initial physical examinations, and counseling services for individuals, groups, and families.

The counseling services were included in the bundled rate, but New Era also billed separately for them.

Prosecutors allege the center never provided psychotherapy, submitted false billing claims, and only offered the counseling sessions covered by the weekly bundled rate.

New Era has offices in New Haven and Bridgeport. The company’s website states it provides “patient-focused care that results in positive health outcomes and behavioral changes.”

Wiggin and Dana attorneys Judy Erdfarb and Maureen Weaver represent New Era.

The firm released a statement Wednesday on behalf of Ebenezer Kolade. the company’s chief executive officer and president.

“For 16 years New Era Rehabilitation Center has been a respected and valued member of the New Haven and Bridgeport communities, providing much-needed behavioral health and substance abuse treatment services,” the statement reads. “NERC has fully cooperated with a recent government investigation into some of its past billing practices and, without admitting any wrongdoing, has reached an agreement in order to settle this matter. This settlement agreement is not an admission of liability. Instead, NERC wishes to avoid the disruption of litigation, and focus on addressing the state’s devastating opioid crisis and helping patients recover.”

The seven-count lawsuit claims the company violated state and federal law. It alleges presentation of false claims, making or using a false record or statement, unjust enrichment, payment by mistake, presentation of false claims in violation of Connecticut’s FCA, breach of contract, and making or using a false record or statement in violation of Connecticut’s FCA.

The case is among the latest across the country involving alleged billing fraud by drug and alcohol rehabilitation centers. It is also the latest in a slew of FCA cases that the U.S. Justice Department said led to the recovery of more than $3.7 billion in the fiscal year 2017. The recoveries included $2.4 billion in the health care industry, including drug companies, hospitals, pharmacies, laboratories, and physicians, according to the DOJ’s website. In many cases, the department helped recover millions of dollars for state Medicaid programs.