Substance Abuse Recovery Providers and the New Mental Health Reality

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.


About Michael Weiner