Addiction Recovery Care Settles $16.2 Million Kentucky Medicaid Fraud Complaint

On July 16, 2026, Addiction Recovery Care LLC (ARC), an addiction treatment provider organization in Kentucky, entered a final settlement agreement with the federal Department of Justice in which it will pay a civil judgment of $16.2 million. The settlement resolves a federal whistleblower complaint and a Medicaid fraud investigation of ARC and its affiliates Pioneer Health Group, LLC, and Science Hill Family Care, LLC.

The whistleblower complaint was filed in April 2023 by current and former ARC employees under the qui tam provisions of the False Claims Act, which allow private individuals to bring allegations of fraud on behalf of the federal government. The federal government subsequently opened a civil investigation. During that investigation, ARC self-disclosed that it should not have billed for some services, including services identified by the whistleblowers.

The government alleged that from January 2018 through March 2024, ARC falsely represented the qualifications of some clinical behavioral health professionals to receive higher Kentucky Medicaid reimbursement. Behavioral health services including psychotherapy, psychiatric evaluations, and mental health assessments were allegedly provided by lower-level health care professionals but billed as though the services had been provided by employees with higher-level licenses.

The government also alleged that from July 2019 through mid-June 2021, ARC billed Kentucky Medicaid for higher-paying individual therapy services when it had actually provided less expensive group therapy. The federal government characterized the alleged overstatement of professional qualifications and individualized services as “upcoding.”

From January 2019 through December 2024, ARC affiliates also allegedly billed duplicate office visits to Kentucky Medicaid and billed for office visits that had already been reimbursed through an inclusive per diem rate. One ARC affiliate also allegedly billed care management services that did not meet Kentucky Medicaid coverage requirements, including services performed by ARC employees who lacked the required credentials.

The final civil judgment totals $16,205,774.05 and will be paid over several years. According to the Department of Justice, the settlement amount was negotiated and reduced based on the defendants’ financial condition and prospects for continued operations. The current and former employees who filed the whistleblower complaint are eligible to receive a portion of the settlement proceeds.

The claims resolved through the settlement are allegations only, and there has been no determination of liability.

The settlement announcement Addiction Recovery Care and Affiliates Agree to Pay $16.2 Million Civil Judgment to Resolve Medicaid Fraud Allegations was posted by the Department of Justice (DOJ) on July 27, 2026 (accessed August 10, 2026).

The indictment was reported by the DOJ in Addiction Recovery Care Founder Indicted for Wire Fraud and Money Laundering on June 4, 2026 (accessed August 10, 2026).

ARC reported its leadership transition in Strengthening the Future of Recovery: ARC Welcomes Randy Hunter as CEO on August 6, 2026 (accessed August 10, 2026).

For more information about ARC, contact: John Wilson, Vice President, External Affairs, Addiction Recovery Care LLC, 16386 US-23, Louisa, Kentucky 41230; 888-520-8736; Email: john.wilson@arccenters.com; Website: https://www.arccenters.com/

For more information about Angelica Capital Trust’s allegations, contact: Anthony Mathias Candido, Clifford Chance US LLP for Angelica Capital Trust, Two Manhattan West, 375 9th Avenue, New York, New York 10001; 212-878-8000; 212-878-8375; Email: anthony.candido@cliffordchance.com; Website: https://www.cliffordchance.com/