As prosecutions continue in a kickback and insurance fraud scheme carried out at a now-defunct Bucks County drug abuse treatment company, Pennsylvania lawmakers have taken notice and believe there are more messes to be cleaned up in the treatment industry.
State Rep. Tina Davis said she believes so many people are struggling with substance abuse that authorities have been soft on the industry that is supposed to help them.
“l have been talking about the unseemly characters in this business. Nobody wants to listen and they turn their heads because these people need help,” said Davis, a Bucks County Democrat.
In June, she stood on the porch of the former Yardley headquarters of scandal-ridden Liberation Way with two other lawmakers and called for passage of a bill that would make “patient brokering” by treatment companies a felony. Democrat state Sen. Steve Santarsiero of Bucks County has filed a bill identical to Davis’ in the Senate.
In patient brokering, people are paid or given kickbacks for directing struggling substance abusers to a particular facility. Pennsylvania has no law specifically making the practice illegal, while the U.S. Congress in 2018 passed the Eliminating Kickbacks in Recovery Act to curb patient brokering.
In late 2017 — even after investigators working for state Attorney General Josh Shapiro began to ask questions — Liberation Way was sold to investors, generating millions of dollars for the original owners. It was subsequently renamed, but soon after filed for bankruptcy protection and closed its doors.
A push for licensing fees
Meanwhile, state Sen. Judy Schwank of Berks County, another Democrat, has proposed that the 800-plus treatment centers in Pennsylvania pay for the licenses they get from the state, something they have never done.
In March, Shapiro and federal prosecutors announced dozens of felony charges had been filed against 11 people associated with Liberation Way, which drew patients from Pennsylvania and many other states.
A media report published in the summer of 2018, based on interviews with more than a dozen then-current and former Liberation Way employees, showed the company appeared to put profits before employee and client welfare. Owners sold the company for more than $30 million.
A guilty plea by one of 11 defendants, company medical director Dr. Domenick Braccia of Perkasie, was announced by federal authorities in May.
He pleaded guilty to conspiracy to commit health care fraud. Braccia was accused of prescribing tests for patients he never saw, and authorities said he never stepped inside any of the three Liberation Way treatment facilities. They were located in Yardley in Bucks County and Lower Merion and Upper Dublin townships, both in Montgomery County.
Guilty pleas amid more court dates
Another defendant, 44-year-old Jesse Peters of Lake Worth, Florida, entered a guilty plea in federal court on April 16, a Shapiro spokeswoman said last week in response to an inquiry by The Morning Call. Federal authorities made no announcement of the Peters plea, and the documents were sealed by a judge, online court information shows.
But a court document that gave information on the case against him said Peters was a partner in Florida urine-testing laboratories. It said Peters agreed to kick back to people associated with Liberation Way about 40% of insurance money paid to the labs for doing testing of Liberation Way clients’ urine, in exchange for the Pennsylvania company sending many urine samples to his labs for testing.
A reporter who interviewed many Liberation Way employees and former clients in 2017 and 2018 was shown out-of-network bills for urine tests of Liberation Way clients that surpassed $3,000 per sample.
Trial or pretrial dates have been set in the next few months for several other defendants in the Liberation Way case, court records show, including company co-founder and CEO Jason Gerner, 46, of Shamong, New Jersey, and Michael Armstrong, 36, of Cherry Hill, New Jersey, who led marketing efforts.
“They put [patients] in these facilities where they were destined to fail,” Shapiro said of the Liberation Way defendants at his March press conference. “They used these people for all they were worth, and that worth was defined by insurance benefits.”
The scandal affected thousands of people, including clients, parents, employees, county- and state-level treatment oversight workers and other treatment center operators.
Olin Morris of Philadelphia, a former Liberation Way employee who had no part in the schemes and left after about a year of work, said, “There were a lot of shady things going on and I wanted no part of it.”
Morris said the industry needs performance measures.
“There has to be some type of change, where the client comes first and the clients are not exploited,” he said.
Davis, in a phone interview, said the legislation she has proposed would protect people seeking recovery and prevent them from being “enticed or induced” by paid marketers.
Another supporter of the Davis-Santarsiero concept, Bucks County Rep. Perry Warren, a Democrat, said in a phone interview that bribes and kickbacks “have no place in addiction recovery.” Warren said a friend of a family member had had “a very bad experience” at Liberation Way.
Schwank has put out a memo to lawmakers that outlines her proposal to charge fees for treatment licenses. She has not yet formally filed a bill.
Tracking taxpayer costs
In 2017, Auditor General Eugene DePasquale ? who is now running for Congress and has spoken publicly of his father’s 1995 arrest on drug-trafficking charges and subsequent federal incarceration ? completed an audit of spending of public money by several Pennsylvania agencies on drug treatment.
It included spending by the Pennsylvania Department of Drug and Alcohol Programs, which licenses treatment centers. The audit found about half of states with similar profiles to Pennsylvania charged licensing fees. The fees ranged to as much as $5,000 per facility in Nevada.
In general, licensing fee revenue gives an agency more money to oversee the industry in which the licenses are being granted.
As of Jan. 1, there were 824 active treatment center licenses issued by Pennsylvania Department of Drug and Alcohol Programs. While the department performs inspections of the facilities, the licenses are free.
Schwank has said she intends to follow up on her licensing fee concept with a separate proposal to compel treatment centers to pay fines when they break state regulations.
An outside review of Liberation Way’s state inspections, done long before Shapiro announced the arrests, found the company’s Upper Dublin facility had far more violations than any other treatment center in a three-county area. But the state agency had no power to levy fines.
State Rep. Gene DiGirolamo, a Bucks County Republican who chairs the Human Services Committee and has long been viewed as an authority on drug abuse treatment lawmaking in Pennsylvania, did not respond to requests for comment in the past week.
State Rep. Todd Stephens, a Montgomery County Republican whose district includes one of the former Liberation Way facilities, said he would support both of Schwank’s proposals.
“We have to take a look at ensuring these treatment centers that are in operation are helping the people they are purporting to help,” Stephens said. “Many, many places are fined when they violate regulations, and treatment centers should be no different.”
Morning Call reporter Ford Turner can be reached at 717-783-7305 or fturner@mcall.com.
