U.S. files civil charges against NY drug treatment nonprofit following arrests

By Joseph Ax NEW YORK (Reuters) - The U.S. government on Tuesday filed civil charges against a chain of substance abuse treatment centers in New York City over an alleged Medicaid kickback scheme, a week after the New York attorney general's office indicted the father and son who ran the centers. The office of Manhattan U.S. Attorney Preet Bharara brought a lawsuit in Manhattan federal court against Narco Freedom, a nonprofit that provides treatment to tens of thousands of patients at 10 locations. Narco Freedom operates what are known as "three-quarter houses," where individuals undergoing treatment are offered housing. The nonprofit requires those individuals to enroll in outpatient programs run by Narco Freedom, according to the lawsuit. "Narco Freedom then bills Medicaid for the outpatient program services that are a condition of residency at its Freedom Houses," the lawsuit said. "As a result of this illegal kickback scheme, Narco Freedom has received tens of millions of dollars in Medicaid funds." Lawyers for Narco Freedom did not immediately respond to a request for comment. A call to Narco Freedom was not immediately returned. The organization's top executives, Alan Brand and his son Jason Brand, last week pleaded not guilty to criminal charges against them. Richard Harrow, a lawyer for Jason Brand, said the charges against his client appeared to focus on “an insurance dispute.” “When all the facts come out, I think he’s going to be vindicated,” Harrow said. The lawsuit comes days after New York Attorney General Eric Schneiderman announced fraud and larceny charges against the Brands. Schneiderman accused the men of using the drug and alcohol treatment centers as their personal piggy bank to finance a luxurious lifestyle. Prosecutors said Alan Brand received a monthly kickback of $13,000 from a real estate developer who rented buildings to Narco Freedom in exchange for agreeing to house the nonprofit’s facilities in the developer’s buildings, using taxpayer money for rent. Andrew Hruska, a lawyer for Alan Brand, said he intends to fight the charges. “Alan Brand has done remarkable service to the community,” he said. Both men were also charged with filing a false insurance claim for damage to a Narco Freedom location that inflated the estimate. The restoration work was then secretly steered to a company owned by Jason Brand, authorities said. The organization receives nearly $40 million annually in Medicaid reimbursements and state funds, according to Schneiderman's office. (Reporting by Joseph Ax; editing by Andrew Hay)