60 Arizona providers and patients put state on notice that they'll sue over Medicaid fraud

A group of Arizona behavioral health providers and clients say they've put the state on notice of an intent to file multiple lawsuits over the recent Medicaid fraud scandal.

Leaders of the effort say they filed 60 notices of claim — precursors to lawsuits — Friday with the Arizona Attorney General's Office.

The notices of claim, which name the state of Arizona as a defendant, collectively add up to $2.3 billion, said group organizer André Miller, a Mesa pastor and second vice president of the NAACP's Arizona Conference.

Among defendants in the notices of claim are Arizona Gov. Katie Hobbs, the Arizona Department of Health Services, and the Arizona Health Care Cost Containment System, which is Arizona's Medicaid program and often known as AHCCCS (pronounced access), said Miller, who announced the claims outside the Arizona Executive Tower at the state Capitol on Friday afternoon alongside about two dozen supporters.

The 60 notices of claim are about "unnecessary damages" and harms that the state needs to account for, Miller said.

"It's a sad day that we're even here," Miller said. "Valid providers have been suspended. ... Something needs to happen. Providers have lost their homes. They've lost their families. People have gotten divorced. Marriages are strained. So many things have happened."

State agencies and the governor's office did not immediately respond to a request for comment Friday afternoon.

The notices of claim were filed on behalf of 38 Indigenous people who are former patients at Arizona behavioral health facilities and 22 behavioral health providers who were affected by the state's crackdown on massive Medicaid fraud, according to Ayo Glanton, an attorney and behavioral health provider who worked on the notices of claim.

Glanton's contract with AHCCCS was unfairly suspended and terminated in the fall, she said.

Valid providers who were suspended were "Black, Brown and immigrant," and "got lumped in the same category" as so-called bad actors, Glanton said.

"We're not saying the bad actors aren't out there but we are saying that we are good actors," she said. "We're still helping folks without receiving any money. ... We're still helping because that's what we do."

Take a closer look: Arizona leaders were warned of massive Medicaid fraud. It took them years to grasp the problem

Glanton says that in an effort to stop future fraud, AHCCCS has unfairly punished legitimate providers and has not provided necessary coordination of care for patients who were displaced or lost treatment as a result of the crackdowns.

Genasha Cotton, administrator at Pillars of Life outpatient behavioral health clinic in Casa Grande, is one of the providers who filed a notice of claim. Cotton has not been accused of any wrongdoing but says AHCCCS has owed her tens of thousands of dollars since October. Cotton says law-abiding providers are suffering from delayed payments because of overzealous practices and overreach by AHCCCS.

The massive fraud was announced to the public during a multi-agency news conference a little more than a year ago, on May 16, 2023. AHCCCS leaders estimate the fraud has fleeced taxpayers of up to $2.5 billion, and victimized an unknown number of people, many of them Indigenous, with promises of drug and alcohol rehab that they never received.

An AHCCCS medical director recently went public with evidence that the agency knew about possible fraudulent billing and harm to patients as early as 2021 yet did not take any action to stop it until two years later.

AHCCCS leaders have said they had to put more oversight and measures in place to prevent fraud. In the wake of the scandal the state agency suspended nearly 400 providers for credible allegations of fraud, though about 20 have since had their suspensions rescinded. The state also says 79 providers have been terminated from the agency over quality of care or health and safety concerns.

People trying to get sober died of overdoses or alcohol poisoning, according to court documents and information from the Phoenix group Stolen People Stolen Benefits, which was created to help victims of the crisis.

Arizona is already facing at least three wrongful death lawsuits related to the fraud.  Those who died were Indigenous men: one from the Crow Tribe of Montana and two from the Navajo Nation, which has tribal land in Arizona, Utah and New Mexico. They were between 32 and 44 years old.

AHCCCS has launched a public awareness campaign about the fraud, as well as a web page with information and updates. That information is at https://azahcccs.gov/SoberLivingFraud

AHCCCS leader Carmen Heredia told reporters last month that the state agency is a "completely new" organization that has taken numerous steps to prevent future fraud.

"We have really reformed the agency," said Heredia, who assumed the lead position at the agency in January 2023. "We've tackled the bulk of the problem, we really have."

Reach health-care reporter Stephanie Innes at stephanie.innes@gannett.com or at 480-313-3775. Follow her on X, formerly known as Twitter, @stephanieinnes

This article originally appeared on Arizona Republic: New claims against Arizona over Medicaid fraud total $2.3 billion