New Life Lodge Agrees To Resolve TennCare Fraud Allegations For $9.25 Million

Wednesday, April 16, 2014

CRC Health Group has agreed to pay $9.25 million to settle allegations of TennCare fraud related to its New Life Lodge Facility in Burns, Tennessee, Attorney General Bob Cooper announced today.

The State alleged that between 2006 and 2012 CRC provided substandard services, repeatedly exceeded its state-licensed patient capacity, and caused third party pharmacies to bill the TennCare program for prescription drugs that New Life Lodge was obligated to provide to TennCare beneficiaries as part of their TennCare-paid per diem.

The settlement is the result of a joint investigation between the State of Tennessee and the United States. The recovery will be divided between the state and federal governments with the State of Tennessee slated to receive approximately $3.4 million.

“New Life Lodge accepted millions of dollars of TennCare funds with the understanding that it would provide necessary substance abuse treatment services to some of the State’s most vulnerable citizens,” Attorney General Cooper stated in response to the settlement. “Instead, far too often those operating the facility failed to meet their obligations by falling short of minimum necessary standards of care or using third-party pharmacies to double-bill the program.”

In addition to double-billing and licensure issues, the agreement identified several ways the facility allegedly failed to meet acceptable TennCare standards. Among the allegations were that New Life Lodge relied on personnel who were not appropriately licensed or supervised; billed for services that were not documented or provided; failed to conform to the facility’s own patient treatment  plans; failed to provide required access to a psychiatrist; and failed to meet legal “medical necessity” requirements that are prerequisites for payment under TennCare. The settlement agreement provides that it is neither an admission of liability by CRC nor a concession by the State that its claims are not well founded.

Attorney General Cooper emphasized the state’s focus on healthcare fraud in mental health: “Safeguarding TennCare's mental and behavioral health support system is a particular focus of this Office.” The allegations arose from a whistleblower suit filed by former New Life Lodge employee Angela Cederoth on behalf of the State of Tennessee and the United States.  Under the Tennessee Medicaid False Claims Act, a TennCare fraud whistleblower can file a qui tam suit on behalf of the State and receive a portion of the funds recovered. 




Burlington Opens New Location In Hixson At Northgate Mall

Burlington, a leading national off-price retailer, is opening a brand new location in Hixson at the Northgate Mall located at 345 Northgate Mall on Friday at 9:30 a.m. The retailer will host a ribbon cutting ceremony to celebrate jobs, community, and of course, shopping.  Along with the ceremony, Burlington will host its premier philanthropic program, Burlington Gives ... (click for more)

Supreme Court Determines Inmates Are Not Required To Sue Private Prison Operators In County Where Correctional Facility Located

In a unanimous opinion, the Tennessee Supreme Court has determined that a statute requiring lawsuits by inmates to be brought in the county where they were incarcerated does not apply to inmates housed in a privately operated correctional facility. Sandy Eugene Womack is serving sentences for armed robbery and robbery at the Hardeman County Correctional Facility in Whiteville, ... (click for more)

Erlanger Finishes Fiscal Year With $18 Million Profit

After a major loss the year before, Erlanger Health System finished the fiscal year with an $18 million profit, officials announced Monday night. It was well ahead of the $2 million gain that Erlanger had budgeted for, and far better than last year's $8 million loss. The profit was boosted by a first-time $19,587,000 from a Public Hospital Supplemental payment and essential ... (click for more)

Chancellor Rules That IDB Must Reimburse Attorney Fees, Other Legal Costs For Helen Burns Sharp On TIF Lawsuit

Chancellor Pam Fleenor has ruled that Helen Burns Sharp, who sued over the validity of a $9 million Tax Increment Financing (TIF) for a planned major development on Aetna Mountain, should be reimbursed her discretionary costs as well as her attorney fees. Ms. Sharp said in a recent court filing that her legal bills to attorney John Konvalinka were $74,427 at the time. The ... (click for more)

ChattaData Is A Real Advance For The City

This past Tuesday, the city of Chattanooga's new performance management tool called ChattaData was unveiled. As the chairman of the City Council’s Budget & Finance Committee, I am excited to witness the city putting this important information online in a way that is accessible and transparent to all taxpayers. This approach shines light on how we as a city prioritize our ... (click for more)

Roy Exum: It’s ‘Hate The SEC’ Day

The boo birds came out on the fly on the ESPN website Sunday afternoon, this moments after the latest AP College Football “Top 25” included eight teams from the Southeastern Conference.   What set naysayers aglow was Mississippi State, after upsetting LSU 34-29 Saturday night, debuted on the list at No. 14 while Clemson, playing Florida State in an overtime thriller, got tossed ... (click for more)