Highlights

Victoria Byers did not drink alcohol. She did not abuse drugs. But when she was a teenager in foster care, several times a month, she would board a van at her group home and go to rehab.

Byers couldn’t figure out why she had to take drug tests and sit in group therapy sessions on addiction at So Cal Health Services, a clinic tucked in an office park in Riverside, Calif.

“And I told them, you know, ‘Why should I be here? I have no drug issue,’ ” said Byers, now a slow-to-smile 22-year-old.

The director of Byers’ group home confirmed Byers was clean but said she sent all six girls under her care to the clinic because she didn’t have enough staff to separate those with substance abuse problems.

The arrangement was strange. It was also a scam.

So Cal Health Services was ripping off taxpayers, part of a pattern of fraud by rehabilitation clinics that collect government funding to help the poor and addicted, a yearlong investigation by The Center for Investigative Reporting and CNN has found. The investigation, which included undercover surveillance and stakeouts, uncovered a rehab racket that continues to this day.

Thousands of pages of government records and dozens of interviews with counselors, patients and regulators reveal a widespread scheme to bilk the state’s Medicaid system, the nation’s largest. Witnesses to the fraud laid out its inner workings in minute detail, some speaking of it publicly for the first time.

In the underbelly of the Drug Medi-Cal program, clinics pad client rolls by diagnosing people like Byers with addictions they don’t have. They round up mentally ill residents from board-and-care homes to sit in therapy sessions they can’t follow. They lure patients in from the street by handing out cash, cigarettes and snacks. They have patients sign in for days they aren’t there. Continue reading →