Sober News

Federal Government Issues Guidance on Sober Home Regulation; Revolutionary not Evolutionary

By: Michael Weiner
November 15th, 2016

Updated guidance has been issued by the U.S. Departments of Justice and Housing and Urban Development. The pronouncements open the door for local regulation of sober homes on a broad basis. In the past, state and local governments were limited in their ability to regulate sober homes because of the Fair Housing Act’s protection of the disabled. The new guidance is designed to assist state and local governments so that they may impose new restrictions but at the same time maintain compliance with the FHA.

The new guidelines do detail many prohibited forms of regulations, but they also go on to explain that state and local governments may act in certain ways that will have a significant impact. Specifically, state and local governments may deny a sober home if the cost burden on the city is too high. Cities can also establish licensing programs or implement other requirements for sober homes, as long as the requirements are not based on stereotypes and are fairly and equally applied.

In addition, the new guidelines clarify that state and local governments can take action in response to criminal activity, insurance fraud, Medicaid Fraud, neglect or abuse of residents, or other illegal conduct occurring at group homes. There can be spacing requirements imposed.

Sober home operators must be aware of the effect that these new guidelines will have on local regulation. Reasonable accommodations will be a far more intensive approval process than ever before.

Substance Abuse Recovery Providers and the New Mental Health Reality

By: Michael Weiner
November 14th, 2016

Substance abuse recovery providers and associated businesses must deal with a new reality as to their place in the mental health continuum of care and their existence as a viable financial model providing services to the recovery population. As an attorney who has spent more than twenty years assisting the recovery community with their governmental needs, I am in a unique position to offer some of the historical background of the recovery industry.

Until the early ‘90’s, it was a “cottage industry,” filled with operators who remained mostly anonymous, with backgrounds as clinicians, psychiatrists and psychologists. Throughout the ‘90’s, the industry grew in an orderly fashion with an emphasis on re-introducing the recovery population into their surroundings, hence the growth of sober homes. And yes, many of those who moved to Florida for recovery elected to stay. Somewhat like the gay population in San Francisco, there was a recovery network in Florida. After the millennium, mental health care benefits became widespread, and after the enactment of the Affordable Health Care Act, true availability became a reality. This began an explosion of sober homes and neophyte operators, all protected by the ADA/FHA and therefore placed throughout neighborhoods of all economic stripes. Many operators were members of the recovery community with good intentions, but they never truly understood the profound responsibility of running their own business and caring for others. The hostility from the general public was overwhelming, with a panic by ordinary citizens as to crime, falling real estate values and fear that their children would be recruited into drug use.

The outcome was inevitable. Local governments, cut off by the ADA/FHA on the issue of sober home placement, turned to their elected officials for other forms of regulation. In 2014, the FBI made its first raids of sober homes, but the indictments seemed to stall. Then, upon scrutiny of the statutes surrounding substance abuse assistance, the government realized that some practices that seemed innocuous on the surface, almost “business as usual,” were in fact illegal. Following this recent realization, state and local authorities began making their own raids, grabbing local headlines.

I have reviewed the arrest reports and the use of confidential informants, and I think that these raids, unlike the FBI’s raids from 2014, are likely to go somewhere. And Florida State Statute 817.505, which is under the “Crimes” section of the Florida Statutes, is at the center of the matter. Those of you reading this may think this is just a “white collar crime,” but you must remember that this is an important matter. Violations of Section 817.505 will be prosecuted.

Florida State Statute 817.505 states “It is unlawful for any person, including any health care provider or health care facility, to: (a) Offer or pay any commission, bonus, rebate, kickback, or bribe, directly or indirectly, in cash or in kind, or engage in any split-fee arrangement, in any form whatsoever, to induce the referral of patients or patronage to or from a health care provider or health care facility.”

Carefully note that Section 817.505 says “direct” or “indirect” and goes further to say “in any form whatsoever.” The broad scope of these provisions cannot be underestimated. There are some who want to craft a way around Section 817.505, but at this point in time, “crafting” is not what the industry needs. Remember all the tax gambits and stock schemes you have read about over the years? They all started with so-called consultants “crafting” something to escape the rules of the SEC or the IRS. In an industry that already has public relations problems, “crafting” is not the solution.

Section 817.505 contains some exceptions, which I will deal with in another article, but these exceptions will not assist you in the manner you expect. The bottom line is this: the marketing, branding and selling of recovery services is highly regulated and the common sense business approach that may be non-controversial in other industries presents difficulties in the recovery industry. Given the regulations, you may have your sign, your website, and “word of mouth” (that is, your own good reputation). But it may surprise you that the State Drug Task Force recently discussed the fact that there are scenarios in which an honest recommendation without compensation could be against the law!

With new legislation, the members of the industry who are trying to deliver outstanding service to a population in need will be given a clear path as to how to market, brand and sell their services. That path does not exist right now under the present legislation. You will be surprised at what operations you believe are common place in the industry break the present laws.

I have personally been counseling my clients to take this conservative approach to marketing long before this new raid, and I believe that we must spread the word that operators should be conservative and not crafty. I do believe that all involved understand the crisis and that State legislators will sooner or later pass new legislation giving some relief.

We urge you to review your operations on, among other things, collection of rent, eliminating “case management” and “boiler room” marketing or call centers. Review policies on medical necessity in connection with ordering urine testing as well as the pricing of the testing. The bundling of services, whether it be Yoga or urine testing, and the billing for it will be closely reviewed not only by the authorities but by the insurance companies. Remember, you have a “captive” population, and if you financially abuse them, expect to be taken to task.

So, at this point, we must wait for the reset button. Let’s see if we can get some reasonable laws passed.

CIGNA Faces a $16 Million Judgment For Failing to Pay Insurance Claims to an Out-of-Network Provider

By: admin
August 30th, 2016

A recent decision issued by a Federal Court in Texas gives a ray of hope to behavioral healthcare providers in South Florida who have been unable to collect millions for medically necessary services provided to CIGNA policy holders for addiction and other behavioral health treatment. Specifically, the Court in Connecticut General Life Insurance Company et al. v. Humble Surgical Hospital, LLC (“Humble”) entered a judgment against CIGNA for approximately $16 million covering underpayments, penalties, and attorneys’ fees and costs. Although Humble is not a behavioral health provider, the issues and analysis articulated in the case are helpful to behavior health providers here in South Florida who have waited years to be paid for services provided to patients insured by CIGNA.

The Humble case was actually initiated by CIGNA when it filed claims against Humble under ERISA and Texas common law seeking reimbursement for alleged overpayments resulting from out-of-network healthcare services which Humble rendered to patients insured by CIGNA. Specifically, CIGNA argued Humble engaged in fraudulent billing practices as a result of its custom of “fee-forgiving” or waiving the patient’s financial responsibility pursuant to deductibles, co-pays and co-insurance. As a result of Humble’s alleged custom of waiving the member’s financial responsibility, CIGNA argued that the policy’s language allowed CIGNA to deny the entire claim submitted by Humble to CIGNA. To the extent the patient paid a portion of the patient’s financial responsibility, CIGNA argued that pursuant to the policy’s language it was only required to pay the same proportional amount to the provider for CIGNA’s share of the claim as paid by the patient.

The Court rejected CIGNA’s interpretation of the policy because ERISA requires the summary plan language to be written so that an ordinary patient will understand. The Court found that CIGNA’s interpretation of this language did not pass that test because the average plan participant would not expect CIGNA’s payment to be conditional on the patient’s payment or to be proportional based upon how much the patient paid. Instead, the Court found that the average patient would expect CIGNA to pay its full share in accordance with the terms of the various plans regardless of what the patient paid or was capable of paying.

Moreover, the Court disagreed with CIGNA’s assertion that CIGNA had the discretion under ERISA to “absolve itself of its responsibility to process and pay claims because it assumed that it could demand upfront payments of co-pays” and then pay some claims on a proportionate share analysis. The Court held that CIGNA’s actions were improper and were a breach of its fiduciary duty to its members and to Humble as an assignee of the member’s benefits. Calling CIGNA’s method for processing claims “simply disingenuous and arbitrary,” the Court stated that it appears that CIGNA’s purpose to deny the claims was predetermined and that CIGNA in fact denied members of the benefit of the bargain they made when they purchased the policy.

This argument is identical to one of the arguments CIGNA has raised against South Florida behavioral healthcare providers to justify its refusal to pay tens of millions in claims for services provided by those providers to CIGNA insureds. Therefore, although the Humble case is a Texas court decision, hopefully the Courts in South Florida will take notice of this case and use its rationale to force CIGNA to act in good faith when dealing with South Florida behavioral healthcare providers and to require CIGNA to pay legitimate claims for services rendered to CIGNA insureds. To allow CIGNA to reduce its obligation to pay for such claims based upon how much the patient paid or is able to pay would cause providers who treat patients without an ability to pay to be punished for helping that population. Moreover, such a policy would create a windfall for CIGNA who has already collected premiums from the patient on the promise that it would pay the claims associated with medically necessary medical/behavior healthcare services.

Addiction Legislation Passes Senate and House

By: Michael Weiner
July 15th, 2016

The Comprehensive Addiction and Recovery Act (CARA) passed the Senate and the House. The bill contains numerous new policies including:

  • Expansion on which health care professionals may prescribe medications to treat people with addiction
  • Treatment instead of incarceration programs
  • Expanded availability of naloxone to first responders and others in the community
  • Grants for improving and expanding treatment and recovery programs

The bill only provided about half as much money as President Obama requested to help pay for the new programs. Despite this fact, it does go far in a number of areas and it helps in the ongoing efforts to see addiction as a health problem not a crime.

Read more here…

Buying and Selling Sober Homes and Other Recovery Facilities

By: Michael Weiner
July 11th, 2016

Are you interested in buying or selling a sober home or other recovery facility? If you are, you are not alone. A good deal of consolidation is occurring in the substance abuse disorder industry. However, it is important to keep in mind that the sale and purchase of a going concern involved in such a highly regulated business has its own challenges.

If you are considering buying or selling a sober home or other recovery facility, you must plan ahead. In going through with this transaction, you will be confronting issues unique to a health care organization. Here is a partial list of some of the matters that you should start thinking about as you consider this transaction:

  1. Be careful with patient information because that information is protected by several laws. You may have heard of the Health Insurance Portability and Accountability Act (commonly known as HIPAA). HIPAA protects against the unauthorized disclosure of confidential patient information. However, you may not be aware that federal and state laws. However, federal law and laws in several states, including Florida, provide additional protections against the disclosure of information related to patients in substance abuse programs. These laws go further than HIPAA and provide even stricter rules about confidentiality. If you are a seller of a sober home or other recovery facility, you must protect the confidentiality of the patients’ information. If you are a buyer of a sober home or other recovery facility, you must find a way to conduct due diligence while still complying with the confidentiality requirements.
  2. The sober home or recovery facility you are thinking of selling or buying may be licensed by certain governmental agencies. It is important to keep in mind that licenses do not just transfer automatically with a sale. The license may have a waiting period for transfers and may require completion of the transfer before the sale is finalized. The seller of a facility needs to be concerned about this transfer just as much as the buyer does. For example, some licenses consider the seller responsible until the buyer is licensed. In addition, some licenses require that the seller maintain records for certain periods of time.
  3. Consider the non-compete clauses that a seller will undoubtedly be asked to sign as part of the deal. It is important to keep these clauses in mind when you evaluate the terms of the sale. For example, a seller will undoubtedly have to sign a clause saying that he will not solicit his former employees. When drafting this clause, you should look carefully at its terms—what geographic area does it cover and how long does it last? This clause can have a major impact, so you should pay attention to it.
  4. Think carefully about what assets the seller has that will become part of the transaction. It is often complicated to place an exact value on these assets. You cannot just look at the number of patients currently in the facility. They are certainly not “for sale!” You also have to consider the average length of stay, how the facility replenishes its patient population, and how it will continue to replenish its population after the sale. Sometimes there is a “system” in place that adds value to the sale. It is important for both sellers and buyers to take the specifics of the situation into consideration and evaluate the legality.
  5. The price of the facility will include an amount to pay for other “hard assets” the facility owns. For example, a facility may own real estate, have money in bank accounts, or have expensive equipment. In considering a transaction, you should think about the values of these assets.
  6. Consider the employees of the facility. Will the clinicians, house masters, technicians and counselors stay after the sale? Are there pension plans or other employment related matters that must be reviewed?
  7. One additional complication could be the existence of long term agreements such as lab contracts, real estate leases or other obligations. Think about whether the facility has such commitments. You also need to consider whether the agreements can be assigned in the sale—if not, the sale might be considered a breach.
  8. The sale will have tax ramifications. It might result in a capital gain or loss. An accountant should be involved.
  9. The sales agreement might be structured to include payments over a period of time. A seller should evaluate the buyer’s financial condition and ability to pay the agreed amounts. One question a seller should think about is whether the buyer will be relying solely on income from the purchased facility to pay the debt.
  10. One hot button topic has been the attitude of insurance companies towards recovery facilities. The parties to the transaction need to evaluate the accounts receivables and the possibility of their collection.

As the above list begins to illustrate, buying or selling a sober home or other recovery facility presents more issues than buying or selling an average small business. This is not a restaurant or a hair salon you are dealing with here.
The seller must place a value on the sober home or other recovery facility and all of its assets (including the value of goodwill) and must then undertake careful planning to ensure a smooth sale. During this process, the seller must balance the sale efforts with ongoing patient responsibilities, maintenance of licenses and qualifications, and other daily tasks involved with operating the sober home. The buyer must use the information available to evaluate whether the sale is in his best interests. Both parties face a lot of responsibility.
If you are considering buying or selling a sober home or other recovery facility, please contact a legal professional such as the experienced attorneys at Weiner & Thompson. This article is not intended to provide legal advice.

Social Media Auto Publish Powered By :