Fraudster who made millions from Arizonas sober living scheme, sentenced to probation

During months of probing into the deceitful sober living residences, the focus has primarily been on the state’s financial losses and neighborhoods targeted by facilities nestled in the suburbs. But the plight of people like Benally and Mariano, who became reliant on these homes for survival, has not received the same attention. After her dad’s passing, Benally went into depression, and a week before her son was born, she relapsed again. While her children are in the care of the Department of Child Safety, she said she has been working toward sobriety and reunification.

Research published in JAMA in 2019 estimated the cost as a range between from about $58.5 billion to $83.9 billion. Although the scam operators were primarily non-Native, it didn’t exclude other tribal members from helping the homes gain clients. Since then, Stewart has continued to assist victims in finding their way home. In December, she estimated that she and her group, Stolen People, Stolen Benefits, have helped more than 500 people from Arizona and other states get home. Stewart said all the work she and her group have been doing has been more than what tribal and state governments have done, and they’ve done it on their own dime.

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He accused Heredia of allowing failures, mismanagement and fraud, and referred to a court case that found AHCCCS improperly issued long-term care contracts. Mayes criticized Senate Republicans on Thursday for not approving a director for the state’s Medicaid agency, the Arizona Health Care Cost Containment System (AHCCCS). According to Democratic Attorney General Kris Mayes’ spokesperson Richie Taylor, her office has convicted 25 people for Medicaid fraud and recovered $140 million in cash and assets. But many people still became homeless as facilities closed their doors with little notice or coordinated care for patients, according to advocates. Authorities called Anders Hustito on Dec. 27 to tell him his son had died.

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The fraudulent homes are still operating and people continue to find themselves on the street as authorities shut down one facility after another, leaving victims to fend for themselves on the streets and find a way home. Allen Sakiestewa experienced a mental breakdown after the loss of his younger brother to alcohol. He found himself living in a fraudulent sober living facility in Florence named Flowing Spring. Kee, once a counselor at a rehab center and a Marine veteran who was in Operation Desert Storm, died in April 2022.

‘They didn’t really teach us anything’

• Some mean driving to remote corners of Pima County, and some see our reporters sitting through endless government meetings to make sure they get the whole story and not just a quick headline.
• One trip to Banner Desert Medical Center was on Dec. 9, a day after he turned 43.
• “They’ve only really approached the fraud aspect of it,” she said, adding that she hopes the lawsuit will shed light on the situation and help people better understand the severity of what has happened because so much is going unreported.
• “Arizona should have a zero tolerance policy for human trafficking, and the perpetrators of these crimes need to be held accountable to the fullest extent of the law,” Hobbs said.
• Hobbs said the state’s response to the sober living crisis is not done, and it’s essential to keep tribal communities involved and engaged so they can work together to address the issue.

More than 11,700 people called it over the next year and a half, state figures show. AHCCCS did not appear to grasp the scope and complexity of the fraud scheme for another year, despite red flags and the spike in payments to treatment programs, Adams said. The Arizona Republic last year also reported that a medical director at the agency became concerned in 2021 about unsafe behavioral health settings.

State leaders have admitted that fraudulent billing extended beyond a small portion of the Arizona Health Care Cost Containment System, contradicting previous assertions that fraud only impacted a small share of the agency. The revelations came to light after AZCIR pressed AHCCCS about its waiver of key provider screenings during the pandemic, ultimately affecting the agency’s entire provider ecosystem, not just those highlighted as the epicenter of the scandal. In Tucson, the Ocotillo Apartments and Hotel shutters, leaving more than 200 people seeking addiction treatment homeless. AHCCCS was investigating the facility’s operators for fraud; police say they were investigating sex trafficking there. The FBI posts an online notice asking to speak to anybody recruited to live and receive treatment from behavioral health group homes in Phoenix, the first public sign of federal law enforcement’s involvement. Tucson Sentinel’s independent nonprofit newsroom learns from & informs Southern Arizonans about the community challenges & unique culture of our Borderlands.

• For those who can’t afford to contribute right now, please sign up for our free Watchdog Update newsletters, & help the spread word about the Sentinel to your friends, family, neighbors & co-workers.
• Some mean driving to remote corners of Pima County, & some see our reporters sitting through endless government meetings to make sure they get the whole story & not just a quick headline.
• “The state has not been accountable to those families under our legal system of compensating them for the harm that has already occurred,” Wood said.
• AHCCCS declined to comment or to make Director Carmen Heredia available for an interview because of the ongoing class-action lawsuit.
• Sen. Theresa Hatathlie, a Democrat from Coalmine Mesa on the Navajo Nation, was also critical of the legislation.

State responds to sober living home scandal, providers not being paid

Vans from sober living homes would drive around reservations, luring those with alcohol and drug problems down to the Valley, promising them treatment and a place to stay that never materialized. AZCIR is part of the Mental Health Parity Collaborative, a group of newsrooms that are covering stories on mental health care access and inequities in the U.S. The national partnership includes The Carter Center and newsrooms in select states throughout the nation. Tucson Sentinel’s independent nonprofit newsroom is an award-winning journalism pioneer that learns from & informs Southern Arizonans about the community challenges & unique culture of our Borderlands. But a single story can cost us thousands of dollars to report – some take months and months of dogged arizona sober living fraud digging, others require paying for tall stacks of records that officials don’t want to provide. Some mean driving to remote corners of Pima County, and some see our reporters sitting through endless government meetings to make sure they get the whole story and not just a quick headline.

So, when the BrewerWood law firm reached out to Stewart about her expertise on the online crisis, she hesitated to speak with the lawyers because she was unsure if it was the best move for the people. The grants are meant to alleviate the harm inflicted upon hundreds of Native Americans who were targeted by Phoenix-area scammers who fraudulently billed AHCCCS, the state’s Medicaid system. Attorney General Kris Mayes hopes the grants will alleviate economic loss and support recovery for Tribal members who were victimized by the fraudulent activity. The move — along with the CDC’s explanation — is a sign that the nation’s top public health agency may be falling in line under HHS Secretary Robert F. Kennedy Jr., a longtime critic of vaccines. I cover justice and the rule of law, including the Justice Department, U.S. attorneys and the courts. In May, the cap on reimbursement rates went into effect, though it’s not clear what prompted AHCCCS to address vulnerabilities that staff had identified more than a year earlier.

He blamed himself for not driving to Phoenix a day earlier to search for his son. Yet Snyder heard concerns from more than 10 facility operators, some of whom acknowledged certain clinics were abusing billing rates but said capping reimbursements could put them out of business and trigger a surge in homelessness. In July 2022, AHCCCS publicly posted a proposal to set a reimbursement rate of $138 per claim for intensive outpatient addiction treatment. The team responsible for setting rates had determined that amount was in line with industry standards. He said he took his son home, only for him to go back to Phoenix a month later and enter a new treatment program. The family knew they would miss him when he enrolled in the Phoenix treatment program.

Heredia had served as the head of AHCCCS without Senate confirmation since early 2023, several years after officials say the fraud likely began during the Republican administration of former Gov. Doug Ducey. In the year before Heredia became director, records show that officials were warned that the fraud was harming patients, but they struggled to respond and failed to alert the public, which Heredia did along with other state leaders in May 2023. Fraud schemes involving phony behavioral health programs in metro Phoenix appear to start. They operate by using people, often Indigenous people, as currency to overbill Medicaid, in some cases in excess of $1,000 per patient per day. The overbilling is for drug and alcohol treatment that is often either subpar or never provided. Sign up for the AZCIR newsletter and ProPublica’s Dispatches newsletter.

The governor defended Heredia’s response to the fraud crisis and said both Heredia and Cunico had worked on a range of initiatives, including improving access to maternal health care. Support Arizona’s only nonprofit newsroom dedicated to statewide investigative journalism. “If you’ve got a vulnerable person and they are suffering from addiction, mental health issues, then you can provide them the narcotics they need to feed that habit,” Peterson said. “You can get them to steal to support that habit and you can get them to perform other acts against the law to maintain their housing and stay in that facility.” That scheme in some cases prevented people with substance use disorder from getting the help they needed. Through further records requests, FOX 10 learned that between seven behavioral health providers indicted in connection to Medicaid fraud, AHCCCS paid them a total of nearly $170 million, only scratching the surface of the estimated $2 billion in fraud.

Jeffrey Hustito responded that he was fine, though that fall he also cried on a phone call with his sister and told her that he hated where he was. He was homesick and said he wanted to return home for an annual tribal ceremony. She said she slept on a mattress on the floor of a rundown house and didn’t get the treatment she needed. At a news conference Thursday, Attorney General Kris Mayes, a Democrat, said there had been more than 100 indictments and 25 convictions so far related to the scheme. “It’s gotten so brazen where we call it the ‘white van syndrome’ ― the predatory recruitment,” Hopi Tribe Chair Timothy Nuvangyaoma told reporters on May 16, when the scandal was announced at a multi-agency news conference. Arizona Gov. Katie Hobbs said she wants to see perpetrators connected with the scam held accountable for human exploitation, too, and not just financial fraud.

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