Kentucky’s Dependancy Restoration Care Prioritized Earnings Over Properly-Being, Shoppers Say — ProPublica

Renault Shirley remembers the primary time he was requested to falsify billing studies for Kentucky’s largest drug rehab heart.

He had simply returned from a church service in 2023 the place the corporate’s founder and proprietor, a charismatic Christian from Jap Kentucky, preached in regards to the worth of getting sober to tons of of purchasers and employees at Dependancy Restoration Care.

Shirley, 58, who led restoration group discussions at ARC, stated certainly one of his supervisors informed him to submit an bill for the day’s canceled therapy classes. With it, Shirley stated, he was informed to manufacture the main points of a bunch dialogue, together with quotations from purchasers, as if they’d attended a gathering.

“It was fraud,” Shirley informed the Lexington Herald-Chief and ProPublica, including that he refused. However he stated he noticed others do it usually after they gathered to enter their studies into the billing system.

Shirley and ARC had been a part of a brand new economic system, a increase fueled by distress and dependancy and straightforward cash from authorities officers determined to curtail the opioid disaster that was devastating rural America. Kentucky’s payouts for drug therapy grew to become so profitable that firms bused in purchasers from different states to fill their therapy facilities.

ARC reigned above all of them, offering greater than two-thirds of all therapy beds in Kentucky at its peak in 2024. Between 2019 and 2024 ARC billed the state $1.7 billion, of which it was paid greater than $377 million in state Medicaid cash for dependancy therapy companies.

Throughout these years ARC received reward for its applications. The U.S. Division of Well being and Human Companies lauded ARC as a mannequin, and Newsweek named the corporate one of many greatest dependancy therapy suppliers within the nation. Kentucky Gov. Andy Beshear known as its founder “a vital accomplice in our combat in opposition to dependancy.”

However ARC’s development was fueled partly by billing practices that federal prosecutors and former workers now allege might have amounted to fraud. FBI investigators had been alerted to the case by way of a whistleblower go well with filed in 2023, which alleged ARC fraudulently billed Medicaid for a therapeutic service known as psychoeducation. The FBI has requested those that “imagine you had been victimized by ARC” to fill out a tip type. That investigation is ongoing, in accordance with the FBI.

ProPublica and the Herald-Chief interviewed six individuals affiliated with the corporate during the last six years, together with former employees members, purchasers and a few who got here for therapy and had been later employed on. They shared publicly for the primary time how they got here to ARC looking for assist for dependancy however grew to become reluctant members within the firm’s alleged billing scheme. Two of them have stated they made related statements to federal investigators.

A part of the fraud, three of them stated, was dedicated on the express urging of supervisors who informed them they had been beneath stress to fulfill billing targets set by ARC leaders — a circumstance exacerbated by a persistent lack of certified employees, they stated.

Those that talked to the information organizations didn’t maintain contemporaneous notes and wouldn’t have entry to firm emails that might assist their claims as a result of they now not work for ARC. However their accounts are corroborated by different purchasers and referred to in two key paperwork.

The primary was a draft settlement settlement between ARC, the state of Kentucky and the Division of Justice filed by legal professionals suing ARC in January as proof in an unrelated civil go well with. That go well with, which is pending, alleges that ARC didn’t repay at the very least $8 million it borrowed from two mortgage firms to pay the DOJ settlement. ARC denied it didn’t pay the corporate.

The draft DOJ settlement doc alleges that ARC knowingly falsified some medical information from 2018 to the beginning of 2024 so as to gather $16 million for group conferences like Shirley described. It allegedly collected thousands and thousands extra by utilizing low-level employees to invoice the state for companies that beneath the legislation should be delivered by a health care provider or licensed therapist.

The second doc was a 2025 investigative report by the Kentucky Cupboard for Well being and Household Companies that has but to be launched however was obtained by ProPublica and the Herald-Chief. That report stated state investigators discovered that ARC had violated so many regulatory requirements, lack of employees chief amongst them, that the circumstances posed “an instantaneous hazard to shopper well being, security and welfare.”

In response to questions for this story, ARC stated it “voluntarily disclosed” billing errors to state and federal authorities after the corporate employed an outdoor company to audit its billing practices. The draft settlement with the DOJ, the corporate stated, was not imagined to be made public and subsequently it couldn’t remark. The draft settlement was unsigned.

“ARC has by no means knowingly or fraudulently billed Medicaid for companies, and there’s no proof that the group inspired workers to falsify group notes for billing functions,” ARC’s Vice President of Advertising Vanessa Keeton wrote in a March 23 e mail in response to written questions in regards to the firm’s billing practices and worker allegations.

She stated that the corporate couldn’t touch upon employees, however that it “maintains a strict, zero-tolerance coverage for fraud and non-compliant billing practices.” Keeton added that “any claims from purchasers or Peer Help Specialists about whether or not a particular service was billed are primarily based on assumptions and don’t precisely mirror precise billing practices.”

Practically the entire individuals interviewed for this story credit score ARC with enjoying a key position of their sobriety. However most additionally stated they felt betrayed by a corporation that publicly touted a Christian message and a dedication to serving to others whereas internally prioritizing cash over the well-being of their purchasers and employees.

Referred to as by God

In late 2008, ARC proprietor Tim Robinson was working as an assistant county legal professional close to Ashland when he had an epiphany. An evangelical Christian who’d just lately gotten sober from alcoholism, Robinson has stated God informed him to begin a “well being care ministry” to assist his neighbors within the mountains and hollows of Appalachia hit laborious by the opioid disaster. There have been few therapy facilities within the state on the time.

Robinson in 2010 opened the primary ARC heart in Louisa, a small city on the West Virginia border, 30 miles from his hometown in Martin County. ARC steadily grew throughout Jap Kentucky. In 2015, the corporate was the state’s first drug therapy supplier to just accept Medicaid sufferers, which dramatically elevated the variety of accessible purchasers. The next yr, ARC unveiled its yearlong “crisis-to-career” program, equal components drug therapy and job coaching that finally helped purchasers grow to be employees at ARC.

But it surely was in the course of the COVID-19 pandemic that ARC exploded in dimension, thanks largely to modifications to billing guidelines put in place by the governor. As the worldwide well being disaster unfolded, Robinson — a well-connected political donor who has given tons of of hundreds to individuals from each main events, together with Beshear, a Democrat — emailed the governor and stated drug therapy facilities wanted assist to remain afloat amid pandemic restrictions.

In March 2020 Beshear signed an govt order that gave firms offering dependancy companies new latitude: The seven managed care organizations that managed Medicaid billing within the state would wish to permit suppliers to invoice for an expanded menu of companies with out prior approval. Beshear stated final month that order helped the commonwealth make vital and vital progress within the combat in opposition to dependancy.

“Kentucky has misplaced far too many youngsters of God to overdose associated deaths,” he stated, citing the current decline in overdose deaths within the state.

The choice meant firms may simply invoice for what are referred to as peer assist companies, that are designed to assist purchasers comply with a therapy plan; these could be offered by employees who full a 30-hour coaching course. ARC inspired purchasers like Shirley to take the course and get credentialed as peer assist specialists. Then, as soon as they graduated from ARC’s program, many transitioned to employees and offered companies they might invoice to Medicaid.

The order additionally allowed simpler billing for psychoeducation, a session throughout which a clinician talks to a affected person about their prognosis and therapy. The broadly outlined service, which on the time might be billed for a number of instances per week, is often offered as a part of a medical remedy session, however Kentucky permits it to be billed as a separate service — which state Medicaid consultants opposed as a result of it drives up the price of therapy.

From 2019 to 2024, ARC billed the state over $400 million for psychoeducation and peer assist, incomes the corporate greater than $125 million, a couple of quarter of all reimbursements paid to Kentucky suppliers throughout that point. The income allowed it to open at the very least 4 new facilities, together with the roughly 700-bed Crown Restoration Heart on a former faculty campus in Springfield, and to buy a shuttered hospital campus in Ashland that ARC now makes use of for inpatient, outpatient and psychiatric companies.

ARC Billed Medicaid for Tens of Hundreds of thousands Yearly in Psychoeducation and Peer Help Companies in Current Years

Psychoeducation quickly grew to become ARC’s most profitable service, accounting for nearly half of its reimbursement from Medicaid in 2024. ARC stated its billing for the service was in accordance with relevant legal guidelines and laws and adopted established billing protocols.

The spike in billing caught the eye of the businesses that oversee state Medicaid spending. Liz Stearman, director of behavioral well being for Humana, and different Medicaid consultants repeatedly warned Kentucky officers that the state’s excessive spending on lower-level peer assist and psychoeducation with out the attendant medical companies wasn’t serving to individuals looking for dependancy therapy. They stated in a letter to the Kentucky Cupboard for Well being and Household Companies that proof confirmed purchasers within the state had extra emergency division visits and extra admissions and readmissions to hospitals and residential drug therapy amenities.

Stearman reminded lawmakers that Kentucky was one of many few states that allowed the service to be billed individually. Psychoeducation “doesn’t have any nationwide requirements of medical standards that exist anyplace within the nation, and the overwhelming majority of states don’t truly cowl (it) as a standalone service,” she informed a state legislative committee on Dec. 3, 2024. “Sadly we’re paying a better quantity of Medicaid {dollars} for much less evidence-based companies,” she stated.

Beshear’s 2020 order and permission from Kentucky Medicaid to invoice psychoeducation as a separate service helped create a brand new income stream for suppliers.

Nonetheless, on the floor the growth of Robinson’s firm was factor, giving Kentucky extra therapy beds per capita than another state — a truth Beshear and different elected officers touted. “I bear in mind not too way back when discovering a therapy mattress meant driving hours away or sitting on limitless ready lists. That’s all modified,” state Lawyer Normal Russell Coleman stated in a 2024 press convention.

By that time, ARC was working as many as 30 amenities in additional than 20 Jap and Central Kentucky counties. That yr Robinson introduced ARC would develop into Ohio and West Virginia.

“It Was Simply Herding Cattle”

Throughout these years employees members stated they had been repeatedly requested to falsify payments for nonexistent therapy. ARC stated it has since invested vital funds to rent a compliance and auditing staff.

The half dozen individuals who spoke to the Herald-Chief and ProPublica stated the corporate generally billed when a gathering didn’t meet the necessities of a gathering, reminiscent of when purchasers watched films unrelated to restoration or had casual discussions whereas touring in ARC vans. Different instances purchasers performed board video games in lieu of group conferences, or the gatherings merely didn’t occur however had been billed for anyway, three former peer assist specialists stated.

When Shirley was a shopper at Crown, ARC’s largest heart, he stated it was frequent for a peer assist specialist to “generally stroll in, ask me what I used to be grateful for. I might write it on a bit of paper, then they would go away.” Shirley stated from speaking with different employees members that this was a technique usually used to submit payments for group conferences that didn’t happen.

Odell Hager arrived as a shopper at ARC in 2015, after a decide ordered him to take action for carrying medicine. He ping-ponged between therapy and jail for the following few years till he landed in 2021 at Could Hill, certainly one of ARC’s facilities in Louisa.

Throughout his time there, first as a shopper after which as a peer assist specialist, Hager noticed examples of well-run peer assist teams however stated they had been uncommon.

“Our peer assist group was, ‘All proper, you all simply sit in the lounge and watch a film,’” whereas group leaders sat within the workplace on their telephones, he stated.

Hager, who labored at three ARC facilities in the course of the span of almost a decade, stated these sorts of teams that ARC billed for had been the usual and forging group notes was frequent. Hager’s account was corroborated by an ARC shopper who overlapped with him. Hager stated he additionally relayed his expertise to the FBI in an interview.

“In my thoughts, it was no completely different than a jail system,” Hager stated. “It was simply herding cattle: get them in, get them out, get them in, get them out.”

Particular person peer assist is meant to be a check-in with a shopper: “How are you doing, are you having ideas of relapse, are you feeling good proper now?” Hager stated.

On the finish of the check-in, a peer assist specialist despatched in quotes from the shopper to ARC’s billing division to show the dialogue happened so the corporate may then invoice Medicaid for the service. “However we had been doing that with individuals we wouldn’t even see as a result of we had been so behind,” Hager stated.

Hager stated he doesn’t blame low-level peer assist specialists for falsely logging group notes. Many peer assist specialists, newly in restoration and overworked, had been following orders from their supervisors or didn’t know any higher, he stated. Hager counts himself amongst them.

“I’m not justifying it,” he stated. “Once we had been doing it we didn’t understand it was a nasty factor.”

Dustin Cornett, 34, was a shopper at Crown. After years of dependancy, Cornett, who’s from South Jap Kentucky, admitted himself in 2022 to ARC. He stated he was upset when he attended peer assist teams that largely consisted of watching fashionable films. “We by no means did a rattling factor,” he stated. “All of us knew it was only a cash racket, an insurance coverage rip-off.”

Peer assist employees stated they had been requested to fulfill billing “quotas” every week. Strain to fulfill these expectations generally resulted in employees falsely recording group notes, stated Hager and Beckie Rose-Bowman, who was initially a shopper at ARC and later director of Riverplace, a 120-bed ARC facility in Pikeville, which has since closed.

“There have been days I had peer assist teams booked back-to-back in one- and two-hour increments with no house in between,” Rose-Bowman stated. Billing was “100% their emphasis,” she stated. ARC supervisors above her monitored peer assist group attendance and would “come down” on employees if their attendance was quick within the notes they submitted for billing, Rose-Bowman remembered. Different instances, if a shopper was lacking from a bunch, employees would depend them as being current, she stated.

Along with denying that ARC inspired such fraud, Keeton, the corporate spokesperson, stated it had processes in place to make sure applicable billing. “When points are recognized, for instance, a peer assist group watching a film moderately than receiving prescribed companies, corrective motion is taken instantly, and people companies will not be billed,” she stated.

“I Don’t Have Sufficient Employees”

As ARC expanded, its staffing scarcity grew extra dire.

Lack of employees, together with licensed clinicians, was certainly one of a number of “systemic deficiencies” the Kentucky Cupboard for Well being and Household Companies discovered in the course of the 2025 investigation of ARC’s operations.

State officers carried out a number of web site visits at three of ARC’s largest facilities after a shopper died in July 2025 at Riverplace, the place Shirley labored. The probe, which lasted from August to November 2025, was additionally partly triggered by separate allegations that purchasers “didn’t obtain well timed or applicable care.” The report didn’t disclose the supply of the allegations.

Keeton stated the corporate was “extraordinarily saddened” by the shopper’s loss of life and, following an inner evaluate, concluded there was “no indication that the loss of life resulted from any motion or inaction on the a part of ARC.”

However these Kentucky investigators concluded that ARC operated with an “absence of certified, licensed medical personnel,” calling it a “sustained and systemic sample.” In some cases, state investigators discovered purchasers had been recording and reporting their very own important indicators, a violation of state and medical guidelines.

That full report, obtained by the Herald-Chief and ProPublica, reveals workers often complained to ARC supervisors and directors with “persistent issues” {that a} scarcity of employees was placing purchasers’ well being and security in danger and hamstringing employees’s capacity to correctly run teams. 

ARC employees raised this difficulty to supervisors and state investigators, in accordance with the report, saying “it seems like we’re working across the clock” and “my life is about to grow to be unmanageable as a result of I don’t have sufficient employees.” One other worker, in accordance with the findings, implied the scarcity was so dire, “I’m scared to take trip.”

To assist cope with the shortages, the corporate started sending purchasers to its personal faculty to get skilled as counselors to work at ARC. Roughly 60% of ARC’s workforce is former purchasers, the corporate’s spokesperson stated.

ARC stated it disputed the findings of the report back to the state and requested a listening to. It famous that the Cupboard didn’t droop or shut the amenities and that the corporate “continues to function and settle for purchasers throughout all relevant ranges of care with the information and approval of the Cupboard.”

The state stated the report has not been launched as a result of the investigation was ongoing. 

Folks inside the corporate stated that these newly skilled employees had been usually used when ARC couldn’t present common visits with licensed medical professionals.

Shannon Grey, who began at ARC in 2021 and oversaw all therapy companies there till early 2025, stated purchasers not often noticed psychologists and counselors and didn’t obtain sufficient therapy from extra extremely skilled clinicians. As a substitute, ARC relied an excessive amount of on peer-led classes billed beneath peer assist and psychoeducation, Grey stated.

“From a therapeutic worth, (that’s) too many companies, too many teams,” stated Grey, who additionally wrote the curriculum that Shirley and others used when main teams. “I argued it many instances, however though I voiced concern, I nonetheless stayed there, so I’ll name myself out on this.”

The state’s 2025 investigative report agreed with Grey, saying unlicensed workers at ARC had been usually requested to do jobs for which they weren’t certified, reminiscent of treatment oversight. This was “regardless of the dearth of licensure, coaching and medical competency required by state regulation,” the Cupboard discovered.

The draft DOJ settlement alleges one thing related: Between 2018 and March 2024, ARC “knew or recklessly disregarded” Medicaid guidelines by permitting unlicensed employees — “practitioners that didn’t have knowledgeable credential” — to invoice for behavioral well being companies that ought to’ve been offered by a therapist or skilled counselor.

Shirley, who had minimal coaching, stated the corporate’s pc billing system solely allowed him to invoice peer assist teams beneath the psychoeducation code, which yielded a better reimbursement fee, even when a clinician wasn’t current with him when main a bunch.

“There was by no means a dialogue about another code to make use of,” stated Shirley, including that he didn’t know on the time how profitable the psychoeducation code was. He solely knew “everyone was utilizing it.”

Keeton disputed this allegation, saying that whereas ARC did obtain thousands and thousands from Medicaid for peer assist and psychoeducation, “there was no directive requiring employees to invoice solely beneath a single code.”

Legislators Step In

At present, Robinson’s grand imaginative and prescient has begun to unravel.

In 2024, the seven managed care organizations in Kentucky raised alarms in a letter to the state’s well being and welfare company citing excessive prices and poor outcomes.

That yr Republicans within the Kentucky Normal Meeting acted, lowering the quantity Medicaid would pay for psychoeducation and peer assist, and ARC’s main supply of earnings started to say no, state knowledge reveals. Republicans additionally reinstated the requirement that suppliers search authorization from insurers earlier than they supply companies.

In March of this yr, a Kentucky lawmaker launched a invoice that outlawed billing for psychoeducational companies within the state. The legislature delivered the invoice to Beshear’s desk in late March. It’s awaiting his choice.

Kentucky Republican state Rep. Kim Moser, the invoice’s sponsor, stated the measure is pressing as a result of billing for psychoeducation has grown exponentially.

“We will have a look at the numbers and see that it’s being overused,” Moser stated. “I simply suppose we have to do one thing about it.”

ARC continues to invoice Medicaid and Medicare. However for the reason that state’s cuts to Medicaid funds for sure companies, and the launch of the FBI investigation in 2024, ARC has laid off tons of of workers and shuttered dozens of amenities, leaving some purchasers homeless.

Final yr, ARC’s founder tried to dump many of the firm partly to pay the DOJ’s settlement, in accordance with the collectors’ go well with, however that deal fell by way of in December. When the 2 mortgage firms sued ARC in January 2026 for allegedly refusing to pay again thousands and thousands they had been owed, they claimed ARC was in “determined monetary straits” and going through “imminent chapter.”

ARC claimed in a separate submitting it wanted that cash for working prices and known as the calls for for reimbursement “unduly burdensome.” The corporate continues to be looking for a purchaser.

Even with the current modifications, lawmakers say Medicaid spending on drug therapy continues to be too excessive. Partly it’s because “there’s large cash in ensuring that addicts don’t truly enter into restoration,” Kentucky state Sen. Chris McDaniel, who co-chairs the legislature’s appropriations and income committee, stated throughout a Feb. 24 listening to.

“I’ve by no means met an trade that may so successfully obfuscate the outcomes of their work because the substance use trade,” he stated within the February listening to. “Sooner or later, now we have to ask ourselves, how a lot of Medicaid is about sufferers, and the way a lot is about earnings?”

As for Shirley, he was laid off final yr. He now works at a unique residential restoration heart in Western Kentucky — a transfer that he stated opened his eyes to how poorly purchasers had been handled at ARC and the way little medical care they acquired.

“Their mannequin is to not assist purchasers,” he stated of ARC. “For them, it’s a revolving door. It’s warehousing.”

Keeton stated this evaluation isn’t reflective of ARC’s mission or the success of the hundreds of people it serves. “We don’t ‘warehouse’ individuals,” she stated. “We put money into them.”