EDITOR’S NOTE: This story was initially printed by ProPublica, a nonprofit newsroom that investigates abuses of energy. Sign up for Dispatches, a publication that spotlights wrongdoing across the nation, to obtain its tales in your inbox each week.
Renault Shirley remembers the primary time he was requested to falsify billing studies for Kentucky’s largest drug rehab middle.
He had simply returned from a church service in 2023 the place the company’s founder and proprietor, a charismatic Christian from Eastern Kentucky, preached concerning the worth of getting sober to lots of of shoppers and employees at Addiction Recovery Care.
Shirley, 58, who led restoration group discussions at ARC, mentioned considered one of his supervisors advised him to submit an bill for the day’s canceled treatment periods. With it, Shirley mentioned, he was advised to fabricate the main points of a bunch dialogue, together with quotations from shoppers, as if they had attended a gathering.
“It was fraud,” Shirley advised the Lexington Herald-Leader and ProPublica, including that he refused. But he mentioned he noticed others do it usually when they gathered to enter their studies into the billing system.
Shirley and ARC have been a part of a brand new financial system, a increase fueled by distress and dependancy and straightforward cash from authorities officers determined to curtail the opioid disaster that was devastating rural America. Kentucky’s payouts for drug treatment turned so profitable that firms bused in shoppers from different states to fill their treatment facilities.
ARC reigned above them all, offering greater than two-thirds of all treatment beds in Kentucky at its peak in 2024. Between 2019 and 2024 ARC billed the state $1.7 billion, of which it was paid greater than $377 million in state Medicaid cash for dependancy treatment providers.
During these years ARC gained reward for its applications. The U.S. Department of Health and Human Services lauded ARC as a mannequin, and Newsweek named the company one of many best addiction treatment providers within the nation. Kentucky Gov. Andy Beshear referred to as its founder “an essential partner in our fight against addiction.”
But ARC’s development was fueled partially by billing practices that federal prosecutors and former staff now allege may have amounted to fraud. FBI investigators have been alerted to the case by way of a whistleblower go well with filed in 2023, which alleged ARC fraudulently billed Medicaid for a therapeutic service referred to as psychoeducation. The FBI has requested those that “believe you were victimized by ARC” to fill out a tip form. That investigation is ongoing, in accordance to the FBI.
ProPublica and the Herald-Leader interviewed six folks affiliated with the company during the last six years, together with former employees members, shoppers and a few who got here for treatment and have been later employed on. They shared publicly for the primary time how they got here to ARC searching for assist for dependancy however turned reluctant contributors within the company’s alleged billing scheme. Two of them have mentioned they made comparable statements to federal investigators.
Part of the fraud, three of them mentioned, was dedicated on the specific urging of supervisors who advised them they have been below stress to meet billing targets set by ARC leaders — a circumstance exacerbated by a persistent lack of certified employees, they mentioned.
Those who talked to the information organizations didn’t hold contemporaneous notes and don’t have entry to company emails that might help their claims as a result of they now not work for ARC. But their accounts are corroborated by different shoppers and referred to in two key paperwork.
The first was a draft settlement agreement between ARC, the state of Kentucky and the Department of Justice filed by legal professionals suing ARC in January as proof in an unrelated civil go well with. That go well with, which is pending, alleges that ARC failed to repay at the least $8 million it borrowed from two mortgage firms to pay the DOJ settlement. ARC denied it failed to pay the company.
The draft DOJ settlement doc alleges that ARC knowingly falsified some medical data from 2018 to the beginning of 2024 so as to acquire $16 million for group conferences like Shirley described. It allegedly collected tens of millions extra by utilizing low-level employees to invoice the state for providers that below the legislation should be delivered by a health care provider or licensed therapist.
The second doc was a 2025 investigative report by the Kentucky Cabinet for Health and Family Services that has but to be launched however was obtained by ProPublica and the Herald-Leader. That report mentioned state investigators discovered that ARC had violated so many regulatory requirements, lack of employees chief amongst them, that the situations posed “an immediate danger to client health, safety and welfare.”
In response to questions for this story, ARC mentioned it “voluntarily disclosed” billing errors to state and federal authorities after the company employed an outdoor company to audit its billing practices. The draft settlement with the DOJ, the company mentioned, was not supposed to be made public and subsequently it couldn’t remark. The draft settlement was unsigned.
“ARC has never knowingly or fraudulently billed Medicaid for services, and there is no evidence that the organization encouraged employees to falsify group notes for billing purposes,” ARC’s Vice President of Marketing Vanessa Keeton wrote in a March 23 e-mail in response to written questions concerning the company’s billing practices and worker allegations.
She mentioned that the company couldn’t touch upon employees, however that it “maintains a strict, zero-tolerance policy for fraud and non-compliant billing practices.” Keeton added that “any claims from clients or Peer Support Specialists about whether a specific service was billed are based on assumptions and do not accurately reflect actual billing practices.”
Nearly all the folks interviewed for this story credit score ARC with enjoying a key position of their sobriety. But most additionally mentioned they felt betrayed by a company that publicly touted a Christian message and a dedication to serving to others whereas internally prioritizing cash over the well-being of their shoppers and employees.
In late 2008, ARC proprietor Tim Robinson was working as an assistant county legal professional close to Ashland when he had an epiphany. An evangelical Christian who’d lately gotten sober from alcoholism, Robinson has mentioned God advised him to begin a “health care ministry” to assist his neighbors within the mountains and hollows of Appalachia hit exhausting by the opioid disaster. There have been few treatment facilities within the state on the time.
Robinson in 2010 opened the primary ARC middle in Louisa, a small city on the West Virginia border, 30 miles from his hometown in Martin County. ARC steadily grew throughout Eastern Kentucky. In 2015, the company was the state’s first drug treatment supplier to settle for Medicaid sufferers, which dramatically elevated the variety of out there shoppers. The following yr, ARC unveiled its yearlong “crisis-to-career” program, equal elements drug treatment and job coaching that finally helped shoppers turn out to be employees at ARC.
But it was throughout the COVID-19 pandemic that ARC exploded in dimension, thanks largely to adjustments to billing guidelines put in place by the governor. As the worldwide well being disaster unfolded, Robinson — a well-connected political donor who has given lots of of hundreds to folks from each main events, together with Beshear, a Democrat — emailed the governor and mentioned drug treatment facilities needed assist to keep afloat amid pandemic restrictions.
In March 2020 Beshear signed an govt order that gave firms offering dependancy providers new latitude: The seven managed care organizations that managed Medicaid billing within the state would want to permit suppliers to invoice for an expanded menu of providers with out prior approval. Beshear mentioned final month that order helped the commonwealth make vital and necessary progress within the struggle towards dependancy.
“Kentucky has lost far too many children of God to overdose related deaths,” he mentioned, citing the latest decline in overdose deaths within the state.
The resolution meant firms might simply invoice for what are generally known as peer help providers, that are designed to assist shoppers comply with a treatment plan; these might be offered by employees who full a 30-hour coaching course. ARC inspired shoppers like Shirley to take the course and get credentialed as peer help specialists. Then, as soon as they graduated from ARC’s program, many transitioned to employees and offered providers they might invoice to Medicaid.
The order additionally allowed simpler billing for psychoeducation, a session throughout which a clinician talks to a affected person about their prognosis and treatment. The broadly outlined service, which on the time could possibly be billed for a number of occasions per week, is normally offered as a part of a scientific remedy session, however Kentucky permits it to be billed as a separate service — which state Medicaid consultants opposed as a result of it drives up the price of treatment.
From 2019 to 2024, ARC billed the state over $400 million for psychoeducation and peer help, incomes the company greater than $125 million, a few quarter of all reimbursements paid to Kentucky suppliers throughout that point. The income allowed it to open at the least 4 new facilities, together with the roughly 700-bed Crown Recovery Center on a former school campus in Springfield, and to buy a shuttered hospital campus in Ashland that ARC now makes use of for inpatient, outpatient and psychiatric providers.
Psychoeducation quickly turned ARC’s most profitable service, accounting for virtually half of its reimbursement from Medicaid in 2024. ARC mentioned its billing for the service was in accordance with relevant legal guidelines and laws and adopted established billing protocols.
The spike in billing caught the eye of the businesses that oversee state Medicaid spending. Liz Stearman, director of behavioral well being for Humana, and different Medicaid consultants repeatedly warned Kentucky officers that the state’s excessive spending on lower-level peer help and psychoeducation with out the attendant scientific providers wasn’t serving to folks searching for dependancy treatment. They mentioned in a letter to the Kentucky Cabinet for Health and Family Services that proof confirmed shoppers within the state had extra emergency division visits and extra admissions and readmissions to hospitals and residential drug treatment amenities.
Stearman reminded lawmakers that Kentucky was one of many few states that allowed the service to be billed individually. Psychoeducation “does not have any national standards of clinical criteria that exist anywhere in the country, and the vast majority of states do not actually cover (it) as a standalone service,” she advised a state legislative committee on Dec. 3, 2024. “Unfortunately we’re paying a higher amount of Medicaid dollars for less evidence-based services,” she mentioned.
Beshear’s 2020 order and permission from Kentucky Medicaid to invoice psychoeducation as a separate service helped create a brand new income stream for suppliers.
Still, on the floor the growth of Robinson’s company was a very good factor, giving Kentucky extra treatment beds per capita than another state — a reality Beshear and different elected officers touted. “I remember not too long ago when finding a treatment bed meant driving hours away or sitting on endless waiting lists. That’s all changed,” state Attorney General Russell Coleman mentioned in a 2024 press convention.
By that time, ARC was working as many as 30 amenities in additional than 20 Eastern and Central Kentucky counties. That yr Robinson introduced ARC would develop into Ohio and West Virginia.
During these years employees members mentioned they have been repeatedly requested to falsify payments for nonexistent treatment. ARC mentioned it has since invested vital funds to rent a compliance and auditing staff.
The half dozen individuals who spoke to the Herald-Leader and ProPublica mentioned the company generally billed when a gathering didn’t meet the necessities of a gathering, equivalent to when shoppers watched films unrelated to restoration or had casual discussions whereas touring in ARC vans. Other occasions shoppers performed board video games in lieu of group conferences, or the gatherings merely didn’t occur however have been billed for anyway, three former peer help specialists mentioned.
When Shirley was a shopper at Crown, ARC’s largest middle, he mentioned it was widespread for a peer help specialist to “sometimes walk in, ask me what I was grateful for. I would write it on a piece of paper, then they would leave.” Shirley mentioned from speaking with different employees members that this was a method usually used to submit payments for group conferences that didn’t happen.
Odell Hager arrived as a shopper at ARC in 2015, after a decide ordered him to accomplish that for carrying medication. He ping-ponged between treatment and jail for the following few years till he landed in 2021 at May Hill, considered one of ARC’s facilities in Louisa.
During his time there, first as a shopper after which as a peer help specialist, Hager noticed examples of well-run peer help teams however mentioned they have been uncommon.
“Our peer support group was, ‘All right, you all just sit in the living room and watch a movie,’” whereas group leaders sat within the workplace on their telephones, he mentioned.
Hager, who labored at three ARC facilities throughout the span of almost a decade, mentioned these sorts of teams that ARC billed for have been the usual and forging group notes was widespread. Hager’s account was corroborated by an ARC shopper who overlapped with him. Hager mentioned he additionally relayed his expertise to the FBI in an interview.
“In my mind, it was no different than a prison system,” Hager mentioned. “It was just herding cattle: get them in, get them out, get them in, get them out.”
Individual peer help is meant to be a check-in with a shopper: “How are you doing, are you having thoughts of relapse, are you feeling good right now?” Hager mentioned.
At the tip of the check-in, a peer help specialist despatched in quotes from the shopper to ARC’s billing division to show the dialogue occurred so the company might then invoice Medicaid for the service. “But we were doing that with people we wouldn’t even see because we were so behind,” Hager mentioned.
Hager mentioned he doesn’t blame low-level peer help specialists for falsely logging group notes. Many peer help specialists, newly in restoration and overworked, have been following orders from their supervisors or didn’t know any higher, he mentioned. Hager counts himself amongst them.
“I’m not justifying it,” he mentioned. “When we were doing it we didn’t know it was a bad thing.”
Dustin Cornett, 34, was a shopper at Crown. After years of dependancy, Cornett, who’s from South Eastern Kentucky, admitted himself in 2022 to ARC. He mentioned he was disenchanted when he attended peer help teams that largely consisted of watching well-liked films. “We never did a damn thing,” he mentioned. “We all knew it was just a money racket, an insurance scam.”
Peer help employees mentioned they have been requested to meet billing “quotas” every week. Pressure to meet these expectations generally resulted in employees falsely recording group notes, mentioned Hager and Beckie Rose-Bowman, who was initially a shopper at ARC and later director of Riverplace, a 120-bed ARC facility in Pikeville, which has since closed.
“There were days I had peer support groups booked back-to-back in one- and two-hour increments with no space in between,” Rose-Bowman mentioned. Billing was “100% their emphasis,” she mentioned. ARC supervisors above her monitored peer help group attendance and would “come down” on employees if their attendance was quick within the notes they submitted for billing, Rose-Bowman remembered. Other occasions, if a shopper was lacking from a bunch, employees would rely them as being current, she mentioned.
In addition to denying that ARC inspired such fraud, Keeton, the company spokesperson, mentioned it had processes in place to guarantee acceptable billing. “When issues are identified, for example, a peer support group watching a movie rather than receiving prescribed services, corrective action is taken immediately, and those services are not billed,” she mentioned.
As ARC expanded, its staffing scarcity grew extra dire.
Lack of employees, together with licensed clinicians, was considered one of a number of “systemic deficiencies” the Kentucky Cabinet for Health and Family Services discovered throughout the 2025 investigation of ARC’s operations.
State officers carried out a number of web site visits at three of ARC’s largest facilities after a shopper died in July 2025 at Riverplace, the place Shirley labored. The probe, which lasted from August to November 2025, was additionally partly triggered by separate allegations that shoppers “did not receive timely or appropriate care.” The report didn’t disclose the supply of the allegations.
Keeton mentioned the company was “extremely saddened” by the shopper’s loss of life and, following an inside evaluate, concluded there was “no indication that the death resulted from any action or inaction on the part of ARC.”
But these Kentucky investigators concluded that ARC operated with an “absence of qualified, licensed clinical personnel,” calling it a “sustained and systemic pattern.” In some cases, state investigators discovered shoppers have been recording and reporting their very own important indicators, a violation of state and scientific guidelines.
That full report, obtained by the Herald-Leader and ProPublica, exhibits staff frequently complained to ARC supervisors and directors with “persistent concerns” {that a} scarcity of employees was placing shoppers’ well being and security in danger and hamstringing employees’s skill to correctly run teams.
ARC employees raised this concern to supervisors and state investigators, in accordance to the report, saying “it feels like we are working around the clock” and “my life is about to become unmanageable because I don’t have enough staff.” Another worker, in accordance to the findings, implied the scarcity was so dire, “I am scared to take vacation.”
To assist cope with the shortages, the company started sending shoppers to its personal school to get educated as counselors to work at ARC. Roughly 60% of ARC’s workforce is former shoppers, the company’s spokesperson mentioned.
ARC mentioned it disputed the findings of the report to the state and requested a listening to. It famous that the Cabinet didn’t droop or shut the amenities and that the company “continues to operate and accept clients across all applicable levels of care with the knowledge and approval of the Cabinet.”
The state mentioned the report has not been launched as a result of the investigation was ongoing.
People contained in the company mentioned that these newly educated employees have been usually used when ARC couldn’t present common visits with licensed scientific professionals.
Shannon Gray, who began at ARC in 2021 and oversaw all treatment providers there till early 2025, mentioned shoppers not often noticed psychologists and counselors and didn’t obtain sufficient treatment from extra extremely educated clinicians. Instead, ARC relied an excessive amount of on peer-led periods billed below peer help and psychoeducation, Gray mentioned.
“From a therapeutic value, (that’s) too many services, too many groups,” mentioned Gray, who additionally wrote the curriculum that Shirley and others used when main teams. “I argued it many times, but even though I voiced concern, I still stayed there, so I’ll call myself out on this.”
The state’s 2025 investigative report agreed with Gray, saying unlicensed staff at ARC have been usually requested to do jobs for which they weren’t certified, equivalent to medicine oversight. This was “despite the lack of licensure, training and clinical competency required by state regulation,” the Cabinet discovered.
The draft DOJ settlement alleges one thing comparable: Between 2018 and March 2024, ARC “knew or recklessly disregarded” Medicaid guidelines by permitting unlicensed employees — “practitioners that did not have a professional credential” — to invoice for behavioral well being providers that ought to’ve been offered by a therapist or skilled counselor.
Shirley, who had minimal coaching, mentioned the company’s pc billing system solely allowed him to invoice peer help teams below the psychoeducation code, which yielded a better reimbursement charge, even when a clinician wasn’t current with him when main a bunch.
“There was never a discussion about any other code to use,” mentioned Shirley, including that he didn’t know on the time how profitable the psychoeducation code was. He solely knew “everybody was using it.”
Keeton disputed this allegation, saying that whereas ARC did obtain tens of millions from Medicaid for peer help and psychoeducation, “there was no directive requiring staff to bill exclusively under a single code.”
Today, Robinson’s grand imaginative and prescient has begun to unravel.
In 2024, the seven managed care organizations in Kentucky raised alarms in a letter to the state’s well being and welfare company citing excessive prices and poor outcomes.
That yr Republicans within the Kentucky General Assembly acted, lowering the quantity Medicaid would pay for psychoeducation and peer help, and ARC’s main supply of revenue started to decline, state knowledge exhibits. Republicans additionally reinstated the requirement that suppliers search authorization from insurers earlier than they present providers.
In March of this yr, a Kentucky lawmaker launched a invoice that outlawed billing for psychoeducational providers within the state. The legislature delivered the invoice to Beshear’s desk in late March. It is awaiting his resolution.
Kentucky Republican state Rep. Kim Moser, the invoice’s sponsor, mentioned the measure is pressing as a result of billing for psychoeducation has grown exponentially.
“We can look at the numbers and see that it’s being overused,” Moser mentioned. “I just think we need to do something about it.”
ARC continues to invoice Medicaid and Medicare. But for the reason that state’s cuts to Medicaid funds for sure providers, and the launch of the FBI investigation in 2024, ARC has laid off lots of of staff and shuttered dozens of amenities, leaving some shoppers homeless.
Last yr, ARC’s founder tried to unload a lot of the company partially to pay the DOJ’s settlement, in accordance to the collectors’ go well with, however that deal fell by way of in December. When the 2 mortgage firms sued ARC in January 2026 for allegedly refusing to pay back millions they were owed, they claimed ARC was in “desperate financial straits” and going through “imminent bankruptcy.”
ARC claimed in a separate submitting it needed that cash for working prices and referred to as the calls for for reimbursement “unduly burdensome.” The company remains to be searching for a purchaser.
Even with the latest adjustments, lawmakers say Medicaid spending on drug treatment remains to be too excessive. In half it is because “there’s big money in making sure that addicts don’t actually enter into recovery,” Kentucky state Sen. Chris McDaniel, who co-chairs the legislature’s appropriations and income committee, mentioned throughout a Feb. 24 listening to.
“I’ve never met an industry that can so effectively obfuscate the results of their work as the substance use industry,” he mentioned within the February listening to. “At some point, we have to ask ourselves, how much of Medicaid is about patients, and how much is about profits?”
As for Shirley, he was laid off final yr. He now works at a distinct residential restoration middle in Western Kentucky — a transfer that he mentioned opened his eyes to how poorly shoppers have been handled at ARC and the way little scientific care they obtained.
“Their model is not to help clients,” he mentioned of ARC. “For them, it’s a revolving door. It’s warehousing.”
Keeton mentioned this evaluation isn’t reflective of ARC’s mission or the success of the hundreds of people it serves. “We don’t ‘warehouse’ people,” she mentioned. “We invest in them.”