The Predatory Malibu Rehab Guru Who Ripped Off Obamacare
He’s a convicted sexual predator who targeted women in his care. Soon he’ll be tried for an alleged $176 million insurance fraud. He’s an exceptionally bad person, but as a businessman he was fairly typical of rehab operators in America’s $42 billion-a-year treatment industry.
His name is Christopher Bathum. Until his arrest in 2016 he ran Los Angeles-based Community Recovery, among the fastest growing rehab chains in the nation. Starting with a single treatment center in 2012, Bathum grew Community Recovery into two dozen facilities in California and Colorado, with 400 beds, medical clinics, a testing lab and a Hollywood art center and café, where patients could work and express themselves creatively. Bathum had a vision: “to unleash the power of community medicine” and “heal the plague of addiction in America.”
Because he sometimes he sounded like a cult leader, his employees jokingly referred to him as “L. Ron Bathum.” But no one would dispute the need for treatment when he began Community Recovery in 2012. That year fatal overdoses in the U.S. topped 41,000. As anyone knows who’s been affected, each death marks the suffering of families, countless friends, and co-workers living in the aftermath. Entire cities could be filled with the grieving.
Thousands came to Bathum for help. Most addicts who show up at rehabs know on some level that they’re fighting for their lives. Bathum had answers. He was a practicing psychotherapist and co-author of a book on treatment whose “systemic family” method is still widely used today. He seemed more rock star than rehab owner. A wild-haired man in his fifties, he wore ripped sneakers with a blue blazer and had an unabashed fondness for Teslas.
He was a self-described “feminist,” with a passion for social justice. He opened facilities in an underserved African-American neighborhood, started job programs and a micro-loan bank to help sober single mothers.
Is the $35 Billion Rehab Industry Ready for a Disruption?
The most astounding aspect of Community Recovery was its price. It was free, sort of. Some were charged ten or twenty thousand dollars to enter. Many others were given scholarships. Though it turned out Community Recovery bought insurance policies for patients without telling them. To those desperate for help or a place to sleep, the details of how they got in hardly mattered. It was free enough.
The Affordable Care Act made sweeping changes to the recovery industry, which went into effect in 2012. After decades of denying coverage, insurance companies were required to pay for treatment, and at rates comparable to coverage for major illnesses. The net effect for addicts was that virtually anyone could get a policy, and it would cover up to about $3,000 per day for the first 30 days of treatment, or roughly $100,000 a month. To rehab owners, addicts, no matter how broke or hopeless, suddenly were gold mines, potentially worth up to $100,000 if they could wrangle them into treatment.
The recovery boom was on. Community Recovery was one of hundreds of new rehabs that opened in Southern California. So many popped up that the hundred-mile stretch of coastline from Orange County to Malibu was nicknamed “Rehab Riviera.” Similar booms took place in Florida and in the more ski-friendly parts of Utah. While Affordable Care made it possible to get treatment in any state, apparently many addicts when given the choice would rather try to get sober in scenic areas than in fly-over places like Pittsburgh or Omaha.
Bathum had a leg-up on competitors. A few years before Affordable Care kicked in, when the industry catered to high-rolling addict celebrities and others who could afford payments of $50,000 to a $100,000 a month, he co-founded Seasons in Malibu, a “luxury rehab” (still in business today and not long ago picked by Fortune as a top destination for “CEOs with addictions.”)
Bathum knew the game. At Community Recovery he attracted top talent—nationally renowned doctors and clinicians. His director of family of programs was Candy Finnigan, a star of A&E’s reality treatment show Intervention. Even his lower-level staff included an oddball assortment of sober celebrities—Josh “Lazie” Resnik, once a bassist in the band Danzig; Jodie Sweetin from Full House; Brandon Cruz, the former child star of The Courtship of Eddie’s Father. In an egalitarian twist on celebrity rehabs, Bathum created one where celebrities served the patients.
Community Recovery was a luxury rehab for the people. Many patients lived in hilltop mansions with pools and spas. It abounded with fun activities—surfing, hiking, yoga, paintball fights, go-kart racing, zip-line adventures, and (pseudo) Native American healing sessions that Bathum led in smoke-filled teepees. There was medically-supervised detox, 12-step work, and therapy. But treatment couldn’t be too difficult. Affordable Care created a massive opportunity for rehab owners, but also a challenge. Patients who grew bored could take their fat insurance policies and go somewhere else. Bathum, like countless others in the biz, leaned into a Disneyland treatment model of endless thrills designed to retain patients.
Despite the infusion of funding, Affordable Care did little to change how treatment is done in America. Since the ’40s, rehabs have been using the same tool kit: the 12 steps (developed by AA in the ’30s), psychotherapy and pharmaceuticals—sedatives for anxiety and, since the ’60s, Methadone and now Suboxone to displace opioid addiction. The bad news for patients is that no method produces more than about a 20-percent long-term abstinence rate. Many studies do show treatment helps reduce frequency of drug use, and it might also save lives simply by giving addicts timeouts from dangerous behavior. But the big picture isn’t one that inspires optimism. The odds of complete recovery are about the same as those for beating lung cancer, which is why few rehabs publish hard statistics on their websites.
Yet for rehab owners the bad news is also really great news. Nobody expects their programs to work that well. If 80 percent of their patients relapse, the rehab is well within the parameters of success. If patients occasionally overdose and die, nobody’s surprised. When some patients get better, the rehab and its staff can take credit for being miracle workers.
Bathum achieved guru status inside his empire. His company’s alleged predilection for buying multiple policies for patients allowed them to stay longer. Flush with addicts having fun, surfing, chanting in teepees and generally sober, Community Recovery appeared to be a success.
In late 2015 LA Weekly reporter Hillel Aron published an astonishing exposé. It revealed that Bathum never finished college and faked his persona as a psychotherapist. Prior to running rehabs, Bathum had been a pool-cleaner. He had four felony convictions for committing fraud on eBay. He had a major drug problem, meth and heroin. A few weeks before Aron’s story ran, Bathum had overdosed in a Malibu motel while shooting drugs with patients. There was a photograph of Bathum being loaded into an ambulance during his overdose. Aron unearthed a lawsuit filed by a former patient from Seasons in Malibu who claimed Bathum offered her drugs in exchange for sex. Patients from Community Recovery stepped forward to say Bathum had sexually assaulted them. Some told their stories on 20/20. Bathum went on 20/20, too, and gave an absurd, seemingly methed-out interview in which he denied their allegations and claimed the photo him overdosing at the motel was a simple case of identity theft.
All of it should have led to the immediate shut-down of his rehab. Hundreds of patients remained in his care. Authorities did nothing.
Nearly a year earlier an employee of Community Recovery also tried to get state agencies to intervene. Rose Stahl was a therapy patient of Bathum’s whom he hired as an administrative assistant. Then she heard rumors of his sexual predations. Soon after, Bathum allegedly told Rose he planned to have an enemy of the rehab murdered. She found methamphetamine in his Tesla, and brought it to the attention of senior managers. They threatened Rose with termination if she didn’t stay silent. She received death threats—apparently from Bathum—and while driving home her car was hit and pushed into oncoming traffic, a crash that remains under investigation.
Rose became an FBI informant, then left the company in early 2015. The Bureau was interested in building a fraud case. Rose believed the hundreds of patients in Bathum’s care were in immediate jeopardy. She contacted state agencies tasked with regulating treatment centers. She presented them with evidence of Bathum’s drug use, exploitation of patients for sex, proof of his prior felonies and lack of credentials. State officials informed Rose that they had no authority to inspect or regulate—or even enter—Bathum’s facilities, because under the law they weren’t actual rehabs.
Bathum’s rehabs operated under a perverse legal loophole: he ran them as unlicensed “sober living homes.” As such, they were protected by the Americans with Disabilities Act, which included an obscure provision that gave recovering addicts status as a protected class. Their inclusion as a protected class was done to prevent neighborhoods from discriminating against recovering addicts who wanted to live together in “sober living homes.” Such homes were defined as places where no medical treatment or therapy could be offered. But since the Americans with Disabilities Act prevents state agencies from inspecting sober living homes, it’s nearly impossible to know what’s going on inside them.
In the mid-2000s, Bathum and operators like him realized they could exploit the protected status of sober living homes by converting them into unlicensed rehabs—and avoid oversight from the state. Industry insiders call the practice “Malibu Model” treatment. It’s illegal, but unstoppable. States have tried to assert authority, but have been pushed back by courts.
Thus protected, Bathum continued to operate Community Recovery for nearly two years after Rose Stahl alerted officials to his illegal activities and nearly a year after Aron’s exposé. During this time, Bathum gave heroin and meth to patients and sexually abused at least three. In total, 17 patients died of overdoses while in his care.
His behavior was outrageous, yet Bathum exemplified a unregulated industry. The Affordable Care Act poured money into an already broken system. Industry revenues jumped from slightly more than $20 billion to about $42 billion today. Overdose deaths soared anyway, passing 72,000 in 2017. All of which brings to mind a joke popular with industry insiders: Who benefits from rehab? The owner.
Community Recovery closed in November 2016 when Bathum was arrested on fraud, sexual assault, and drug charges. In early 2018 he was tried on his sex and drug charges and convicted of more than 30 counts that included furnishing drugs to patients, sexual exploitation of six women, and rape of a seventh.
He’s awaiting trial for defrauding insurance companies of $176 million. Absent reforms, there are countless Bathums out there, running their rehabs, waiting to help a loved one close to you.
Evan Wright’s Bad Therapist will be published on May 30 by Amazon Original Stories, part of its Exposure nonfiction collection. Wright previously wrote Generation Kill and adapted into it into a limited series for HBO. He also has worked a writer-producer on Homeland, Dirty John, and Homecoming.
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