Treatment Program At Iowa Jail Accused of Fraud, Racketeering

By Keri Blakinger 03/13/17

The retreat center offers addiction treatment services to former inmates in a leased wing of the Polk County Jail. 

Officer giving a tour of the Polk County Jail in Iowa.
Inside the Polk County Jail Photo via YouTube

An addiction treatment program in Iowa led recovering drug users to believe they’d be sent back to jail unless they signed up for private insurance instead of Medicaid, according to counterclaims filed in an ongoing federal lawsuit over insurance payments. 

Wellmark Blue Cross & Blue Shield lobbed the accusations of fraud and racketeering Tuesday in a damning response to a 2016 suit filed by St. Gregory Retreat Center and the ALPP Institute, which offer addiction treatment services to former inmates in a leased wing of the Polk County Jail. 

“Patients who became Wellmark members were coerced to do so by threats or relied on misrepresentations concerning their alleged need to have Wellmark health insurance,” the insurer charged in a response labeling the treatment providers a “criminal network.” 

The legal wrangling kicked off last May, when St. Gregory’s and ALPP sued Wellmark for using “fraudulent post-service medical necessity review” to withhold millions of dollars of insurance payments, a move the service providers claimed could drive them out of business and threaten “the recovery chances of thousands of Iowans.”

But in this week’s response, Wellmark is alleging that St. Gregory’s and ALPP gamed the system to make their patients meet eligibility criteria and effectively forced them to sign up for the private insurance simply to get a higher daily reimbursement rate. The service providers could have netted at least $350 more per patient per day by pressuring recovering addicts to use Wellmark instead of Medicaid. 

St. Gregory’s even went so far as to pay hundreds in premiums for its patients in order to get back thousands in extra reimbursements, the suit claims.

In some cases, Wellmark alleges, the treatment providers pushed patients into services they didn’t need. Medical records show a “pattern and practice of St. Gregory admitting patients to detoxification even though the patient’s medical records showed no evidence of withdrawal,” the counterclaim alleges.

A lawyer for St. Gregory’s fired back at the new accusations.

"It is unfortunate that Wellmark’s current tactic is to bring unsupported allegations against providers simply because those providers had the courage to challenge Wellmark’s refusal to pay millions of dollars in claims," attorney Jesse Linebaugh said in a statement

"St. Gregory and ALPP anticipate filing amended claims against Wellmark and look forward to resolution by the court."

Please read our comment policy. - The Fix

Keri Blakinger is a former drug user and current reporter living in Texas. She covers breaking news for the Houston Chronicle and previously worked for the New York Daily News and the Ithaca Times. She has written about drugs and criminal justice for the Washington Post, Salon, Quartz and more. She loves dogs and is not impressed by rodeo food. Find Keri on LinkedIn and Twitter.