Federal Authorities are Targeting Addiction Clinic Owners in Tricare Fraud Investigations Under the False Claims Act - Healthcare Fraud Defense Firm
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Federal Authorities are Targeting Addiction Clinic Owners in Tricare Fraud Investigations Under the False Claims Act

Man and therapist

Addiction clinics that serve military personnel, veterans, and their family members who are Tricare beneficiaries are at risk of being targeted in federal healthcare fraud investigations. In just one of many recent examples, on March 14, 2019, the U.S. Department of Justice (DOJ) announced that a physician hired to serve as the Medical Director of an addiction clinic in Florida was sentenced to 30 months in prison for his role in the unlawful distribution of opioids, barbiturates, and benzodiazepines. The clinic’s owners had previously pled guilty to crimes including conspiracy to commit healthcare fraud and willfully concealing a scheme involving a healthcare benefit program, and they are currently serving prison sentences of 78 months and 30 months, respectively.

Like Medicare and Medicaid, Tricare is governed by a stringent and complex set of regulations, and addiction clinics that violate these regulations can face prosecution under a variety of civil and criminal federal statutes. Clinic owners can face prosecution for drug diversion and other violations of the Controlled Substances Act (CSA) as well, and these violations can trigger additional charges for Tricare fraud and other related federal crimes.

Types of Substance Abuse Treatments Covered Under Tricare

While Medicare, Medicaid, and Tricare all have their own unique sets of regulations, one common thread among all of these programs is that they will only fund patient services and medications that qualify as “medically necessary.” With regard to addiction, or substance use disorder, Tricare specifically covers:

  • Inpatient services (emergency and non-emergency)
  • Intensive outpatient programs
  • Management of withdrawal symptoms (detoxification)
  • Medication assisted treatment
  • Mental health therapeutic services
  • Office-based opioid treatment
  • Opioid treatment programs
  • Partial hospitalization programs
  • Residential substance use disorder treatment

Tricare does not cover aversion therapy or other unproven methods of substance abuse treatment. However, even within the categories listed above (which may qualify as medically-necessary depending upon a particular patient’s condition and diagnosis), addiction clinics must still adequately establish and document medical necessity. Failure to do so is among the leading factors leading to invasive and dangerous Tricare audits and investigations.

While all types of addiction center treatments are subject to strict federal scrutiny, opioid treatment programs are especially high on the government’s list of priorities. In recent years, the DOJ has launched two new task forces – the Opioid Fraud and Abuse Detection Unit and the Prescription Interdiction and Litigation (PIL) Task Force – both of which are tasked specifically with targeting healthcare providers that prescribe, dispense, and treat patients using opioid drugs. This includes what Tricare calls “medication assisted treatment” or “MAT,” and addiction centers that prescribe and administer buprenorphine and other similar types of medications to patients are under close watch by the DOJ, the Drug Enforcement Administration (DEA), the Department of Defense (DOD), the Defense Health Agency (DHA), and the Opioid Fraud and Abuse Detection Unit and PIL Task Forces.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden



Lynette S. Byrd
Lynette S. Byrd

Former DOJ Trial Attorney


Brian J. Kuester
Brian J. Kuester

Former U.S. Attorney

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney

Local Counsel

John W. Sellers
John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara
Linda Julin McNamara

Federal Appeals Attorney

Aaron L. Wiley
Aaron L. Wiley

Former DOJ attorney

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (DOJ)

Chris Quick
Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow
Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Other Issues That Can Trigger Investigation and Prosecution of Addiction Clinic Owners

Along with providing treatment services and dispensing opioid medications that do not meet Tricare’s standard for medical necessity, addiction clinics, and their owners are being targeted for a broad range of other offenses as well. Issues that can raise red flags and trigger targeted federal investigations include:

  • High Billing Volume for Individual Services and Drugs – By the nature of their business, addiction clinics often bill Tricare for the same services and drugs on a routine basis. While this can be fully justifiable, it can also trigger scrutiny from federal agents who view a high volume of repeat billings as a potential red flag for program fraud.
  • Medical Directorships and Other Contractual Relationships – Here too, while medical directorships and other similar types of contractual relationships can becompletely legitimate, the government’s experience in healthcare fraud investigations has shown that they are often pretexts for unlawful referral fee transactions. When entering into these types of relationships, addiction centers must be extremely careful to describe the services to be rendered and structure the compensation arrangement in such a way that they do not trigger federal scrutiny.
  • Billing for Unproven Treatments – As noted above, Tricare does not provide reimbursement for “unproven treatments.” Among other treatments, this can include the prescription and administration of medication compounds that have not yet been scientifically proven to be effective for the treatment of addiction.
  • Reliance on Marketers and Payment of Illegal Fees – Involvement with marketers that buy and sell lists of Tricare beneficiaries can spell trouble for addiction clinic owners as well. Unfortunately, many of these individuals and companies knowingly engage in practices that are prohibited under federal law, including clear violations of the Anti-Kickback Statute. Paying for referrals using program-reimbursed funds can trigger civil or criminal penalties, and claiming that you were unaware that you were illegally paying for Tricare beneficiary referrals will not save you from federal prosecution.
  • Intentional and Unintentional Billing and Coding Violations – Along with these (and other) issues, addiction clinics and their owners are frequently targeted for other types of Tricare billing and coding violations. From submitting incorrect billing codes to unbundling services and billing for services not actually rendered, when faced with allegations of Tricare billing fraud, addiction clinic owners must be prepared to defend themselves effectively.

Avoiding Civil and Criminal Penalties During a Tricare Fraud Investigation

With these risks in mind, what can owners of addiction clinics that bill Tricare do to protect themselves from civil liability and criminal prosecution in the event of a DOJ, DEA, DOD, DHA, or other federal agency investigation? As with all aspects of healthcare compliance, one of the keys (in addition to knowing what types of practices and transactions can get you into trouble) is thorough documentation. While this is important for all types of healthcare providers, it is especially important for those in heavily-scrutinized sectors such as addiction intervention and substance abuse treatment.

Maintaining thorough documentation starts with developing and implementing a customized compliance program, and it is a never-ending process. From entering into compliant contracts to proving medical necessity, addiction clinic owners must constantly be thinking: “If federal agents question me, could I prove that what my addiction center is doing is compliant?” If the answer is, “No,” or “I don’t know,” then there is work that needs to be done.

What if federal agents are already looking into your addiction center’s Tricare billings? If your addiction center is currently under investigation, then one of the first things you need to do is assess your potential exposure. Do you have the documentation to support your Tricare billings if they are questioned? If not, what other defense strategies can you use to protect yourself against civil or criminal charges?

Of course, this is easier said than done. In order to assess your potential exposure, not only do you need to immediately conduct an internal assessment, but you must also determine why federal agents are targeting your clinic. Is it because your Tricare billing data raised red flags in an automated review? Or, as a marketer or other third party made allegations in an attempt to protect itself during a parallel investigation? Until you know why your addiction clinic is being targeted, you simply cannot make informed decisions about your defense. As a result, before you do anything else, you should hire an experienced legal team to intervene in the investigation as soon as possible.

About Oberheiden, P.C. | Proven Federal Defense Lawyers for Tricare Fraud Investigations

Oberheiden, P.C. is a team of highly-experienced federal healthcare fraud defense lawyers who have a proven track record of success in Tricare fraud investigations. Our lawyers have helped clients avoid civil and criminal charges in Tricare fraud investigations involving the DOJ, DOD, and various other federal authorities. In addition to this defense record, several of our lawyers also previously served as prosecuting attorneys with the DOJ, where they focused specifically on cases involving qui tam lawsuits, False Claims Act violations, and healthcare fraud investigations targeting addiction clinics and other providers.

In addition to representing addiction clinics and their owners in Tricare investigations, we also routinely assist clients with all aspects of Tricare compliance. If your clinic is not yet being targeted but you are concerned that you could be exposed in the event of an investigation, our lawyers can assess your risk and help you implement a comprehensive compliance program that is tailored to the specific types of issues we see in Tricare investigations. Whether you are new to Tricare or you have an outdated (or inadequate) Tricare compliance program, our lawyers can work with you to ensure that you are prepared to fend off charges in the event of an investigation.

Speak with a Federal Healthcare Fraud Defense Lawyer at Oberheiden, P.C.

Do you need to speak with an attorney about Tricare compliance? Do you need defense counsel for an active Tricare fraud investigation? If so, we encourage you to contact us immediately. To speak with a member of our federal healthcare fraud defense team as soon as possible, call 888-680-1745 or inquire online now.

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