Addiction Recovery Care says it’s cooperating with FBI investigation into possible fraud

Addiction Recovery Care, Kentucky’s largest provider of
drug and alcohol treatment, has offices and other facilities
 in Louisa. (Kentucky Lantern photo by Matthew Mueller)

By Deborah Yetter
Kentucky Lantern

Kentucky’s largest provider of addiction treatment services, Addiction Recovery Care, or ARC, is the subject of an FBI investigation into possible health care fraud, according to a July 30 post on a website of the federal agency’s Louisville office.

ARC, which is funded almost entirely through Kentucky’s Medicaid program, has not been charged with any crime but the agency is asking people with information to fill out an online form “if you believe you were victimized by ARC or have information relevant to this investigation.”

ARC, a for-profit company based in Louisa, and whose CEO and affiliates have emerged as prolific political donors in recent years, said in a statement from spokesman Kyle Collier that it is cooperating with the FBI.

“We have recently learned that there is a federal investigation into ARC,” the statement said. “As we all know, healthcare is one of the most highly regulated fields in the country, and addiction treatment is among the most highly scrutinized healthcare services. ARC is a trailblazer in the field of addiction services. We are confident in our program and in the services we offer. We, and our legal counsel, are cooperating fully in the investigation.”

Collier directed further inquiries to ARC’s chief legal officer, Jessica Burke, who provided a similar statement.

ARC has developed a reputation for aggressive expansion since it was launched by Tim Robinson, a Lawrence County lawyer who founded the company with a single halfway house for alcohol treatment in 2010. Fueled by the availability of new Medicaid funds for substance use disorder treatment since 2014 under the Affordable Care Act, ARC operates some 1,800 treatment beds in 24 counties and reaches hundreds more clients through outpatient services, the Kentucky Lantern reported in July.

Last year, ARC took in $130 million in Medicaid funds, the government health plan which gets most of its money from the federal government, making it by far the state’s largest provider of substance use services.

Robinson and his wife, Lelia, own ARC and some related entities which provide them with an annual income of $533,400, according to a 2022 tax filing of a related non-profit company, Odyssey Inc.

The company has been singled out for praise by politicians including Kentucky Gov. Andy Beshear, who spoke at an ARC ribbon cutting for a new ARC facility in March.

“With the help of organizations like ARC, we are working to build a safer, healthier commonwealth for our people,” Beshear said.

He also praised Robinson, ARC’s founder, in his State of the Commonwealth speech in January.

“With us today,” Beshear said, “is Tim Robinson, founder and CEO of ARC, an essential partner in our fight against addiction. … I’m proud to say we now have more treatment beds per capita than any other state in the country.”

From mid-2021 through the end of 2023 Robinson, his corporations and employees gave at least $252,500 to political committees supporting Beshear, according to reporter Tom Loftus’ analysis in the Kentucky Lantern of campaign finance records.

The donations to Democrat Beshear were a shift in the giving pattern for Robinson, a lifelong and loyal Republican. He also gave big to Beshear’s opponent in the 2019 governor’s race, Republican incumbent Gov. Matt Bevin.

The Lantern’s analysis shows that — including money contributed to Beshear committees — Robinson, his corporations and employees have made at least $570,000 in political contributions over the past decade as his for-profit company grew.

He also has donated to Kentucky Republican lawmakers, including some who wrote recent letters on ARC’s behalf, asking that rate cuts proposed to ARC and other addiction providers be suspended until further study.

The rate cuts of 15% to 20% proposed by three of the six private insurance companies that process state Medicaid claims became public recently at a legislative hearing. ARC and another provider told lawmakers that such cuts would devastate Kentucky’s efforts to turn the tide of addiction to drugs and alcohol.

“Kentucky has made significant strides in access to treatment,” Matt Brown, chief administrative officer for ARC, told a July 30 legislative committee. “With these cuts, it could completely set back addiction treatment in our state 20 years.”

Six national insurance companies known as managed care organizations, or MCOs, handle the majority of the state’s $16 billion a year Medicaid business. Under contracts with the state, they are paid a fixed rate per member to cover the cost of care.

Brown, the ARC official, told lawmakers this is no time to cut payments for addiction services, citing some indicators of success.

Brown noted that overdose deaths in Kentucky have declined for the past two years after years of rising. Kentucky also has the most treatment beds per resident, most of them through ARC, he said.

The state’s latest annual overdose report, released in June, shows a decrease in deaths to 1,984 from 2,200 the year before, a decline of 9.8%.

In a statement released after the hearing on the cuts, the Kentucky Association of Health Plans, which represents the MCOs, said its members “are proud to work collaboratively with quality, trustworthy providers of behavioral health and substance use disorder treatment” and access to those services is “top of mind” to ensure those in need receive care.

“Health plans strive for the best networks possible and are encouraged by the state to prioritize plan member outcomes and value-based care,” it said.

The FBI posting on the website seeking information on ARC does not provide further information about the nature of the investigation,

A spokeswoman did not immediately respond to a request for comment.

A questionnaire people are asked to fill out includes several questions including whether they have been or are a patient at ARC and if so, what services were received. It also asks whether the person responding has ever made a complaint before about ARC and if so, to whom.