Third family sues Arizona for wrongful death connected to Medicaid fraud

A third Indigenous family is suing Arizona over allegations that state officials failed to stop massive Medicaid fraud schemes that caused the death of their loved one.

Avondale police on April 6, 2023, found 34-year-old Thomas Acey Russell dead on a mattress on the floor of a residence that was being used by "sham entities," according to the lawsuit, which names both the Arizona Department of Health Services and the Arizona Health Care Cost Containment System, Arizona's Medicaid agency, as defendants in the case.

The lawsuit, filed by Russell's parents, is the third known wrongful death suit to be filed against the state this year connected with massive Medicaid fraud schemes that involved allegations of human trafficking that preyed on Indigenous people and is reported to have bilked taxpayers out of up to $2.5 billion.

Investigators and state leaders announced the fraud schemes during a multi-agency news conference May 16 and, at that time, Arizona Attorney General Kris Mayes characterized what had occurred as a "stunning failure of government."

Russell, a member of the Crow Tribe of Montana, was "misled into the promise of substance abuse treatment," according to the lawsuit, which goes on to say that an autopsy report showed Russell had a blood alcohol concentration of 0.27% at the time of his death, which is more than three times the legal limit for driving in Arizona, though the lawsuit does not specify whether alcohol is what caused Russell's death.

As of May 2, none of the defendants in the case had submitted a written response to the lawsuit, which was filed last month in Maricopa County Superior Court. Officials with AHCCCS, the state's Medicaid agency, said they do not comment on pending litigation and officials with the state health department did not immediately respond to The Arizona Republic's request for comment.

All three wrongful death lawsuits, which involve the deaths of Indigenous men, were filed by the Phoenix-based Brewerwood law firm and none of the legal actions name a specific dollar amount they are seeking.

State didn't check prospective providers' liability insurance, suit says

The legal action from Russell's family accuses the state health department of awarding licenses to drug and alcohol rehab providers without requiring them to prove that they were covered by liability insurance, "which was a loophole that allowed treatment centers to pop up overnight."

Had the health department required proof of a valid liability insurance certificate, "many so-called substance abuse treatment centers would have been unable to exist or bill AHCCCS because they would have been vetted by private insurers who would not issue liability insurance policies to these illegitimate treatment centers," the lawsuit says.

The lawsuit says that "due to sheer incompetence and lack of oversight," AHCCCS "blindly paid" fraudulent Medicaid claims "with no questions asked, enabling the fraudsters to grow and thrive."

At the time of his death, Russell was under the care of a state licensed entity called Family Bond Treatment Center, which "callously negligently and recklessly breached the duty of reasonable care" that was owed to Russell, the lawsuit says.

'Gross negligence': Sober living crisis caused Navajo men's deaths, lawsuits against Arizona say

The lawsuit names both Family Bond Treatment Center and another entity called Resilience Home as defendants in the case and says officials connected with the entities "picked up" Russell "for the sole purpose of furthering their scheme of profiting from an interconnected network of entities that would fraudulently bill AHCCCS and provide illegal payments, recruiter fees, and kickbacks."

Family Bond Treatment Center, an outpatient treatment center, as of May 3 was on a list of AHCCCS providers with credible allegations of fraud against them, and has been on the list since October. The facility was licensed by the Arizona Department of Health Services in January 2023 and the state closed the center a year later, licensing records show. When reached by phone, a man who answered the treatment center's phone number, which has a Texas area code, confirmed he was with the Family Bond Treatment Center but said hadn't seen the lawsuit.

No state licensing records for Resilience Home were found. Efforts to reach Resilience Home and the person listed as its statutory agent, Rose Bokbol Maseka, who is also named as a defendant, were unsuccessful.

A "health care and social assistance" business called Resilience Home lists a "principal address" in Avondale that, according to the lawsuit, is the same address as the residence where Russell died, records with the Arizona Corporation Commission show. The records say Resilience Home is active and in good standing.

Families of two Navajo men have sued the state over their deaths

The other two wrongful death cases involve men from the Navajo Nation. Fernando Largo, 32, was discovered dead of an overdose on March 7, 2023, inside a motel room that was registered to a Mesa outpatient behavioral health provider. Carson Carl Leslie, 44, was found dead of acute and chronic alcohol intoxication in the middle of a residential West Valley street on Sept. 28, 2022, after, according to an allegation in a lawsuit, Phoenix-based behavioral health care providers picked him up in Flagstaff and took him back to the Valley.

Investigators have said "bad actors" preyed on Indigenous people, sometimes enticing them into white vans with promises of addiction treatment, then holding them in unlicensed living situations in metro Phoenix against their will with no cellphones, no way to contact their families and no one to help them get well.

'Not being heard': Tribal members condemn sober living bill vote

The fraudsters made money by using the people they'd lured as currency, investigators with the Arizona Attorney General's Office have said. They'd link up with providers, typically licensed outpatient behavioral health centers, and often didn't provide care to the patients, or significantly overbilled for the services that were provided. In some instances, the bad actors provided the people they were brokering with drugs and alcohol, investigators have said.

The scam is widely known as Arizona's "sober living crisis" or "sober living scandal," which is somewhat misleading, because sober living homes don't bill Medicaid, and the crisis was about Medicaid billing fraud.

But sober living homes — places for people to live while they are in recovery from substance use disorder — were central to the schemes set up by many of the fraudsters. That's because of the "assets" that both licensed and unlicensed sober living homes offered in the form of patients to operators that linked up with outpatient behavioral health clinics to file phony billing claims, investigators have said.

Reach health-care reporter Stephanie Innes at stephanie.innes@gannett.com or at 480-313-3775. Follow her on X, formerly known as Twitter, @stephanieinnes .

This article originally appeared on Arizona Republic: Third family sues Arizona for wrongful death connected to Medicaid fraud