Tackling patient brokering and other fraudulent practices in New York and nationally



March 12, 2018

Health Care Alert

Author(s): Jena M. Grady

This alert was co-authored by Jennifer Trinkwald.

In the past few months, the state of New York, the federal government and private actors have started to raise awareness regarding treatment fraud including but not limited to “patient brokering.” “Patient brokering” is a process in which a “broker” collects payment from substance use treatment programs simply for bringing patients to these programs to receive substance use services. Oftentimes misleading marketing strategies are utilized to redirect potential patients to these treatment centers. Brokers often offer incentives to patients and families, including guaranteed admission, free plane tickets and other luxurious amenities. Once enrolled, these treatment programs may provide little to no treatment and engage in fraudulent billing practices including billing for unnecessary tests, exhausting the full range of treatment benefit/levels without actually providing those levels of care and failing to document services actually provided. In New York, brokers also work with treatment programs outside of New York to refer New York residents to programs that New York State Office of Alcoholism and Substance Abuse Services (OASAS) has found to be more expensive and lower quality than care in New York. In extreme cases it has been reported that once a patient is released from treatment, brokers actually provide patients with drugs for the purpose of initiating the treatment process all over again.[1]

On February 8, 2018, as part of New York’s efforts to tackle treatment fraud across the state, OASAS announced a new public service announcement (PSA) campaign to raise awareness and educate New Yorkers.[2] Radio stations throughout New York City, Long Island and Albany will air the PSAs (in both English and Spanish), which will provide New Yorkers with information on the problems associated with treatment fraud and patient brokering as well as OASAS contact information for New Yorkers to report any suspicious activity. In addition to raising awareness regarding patient brokering, the PSAs will publicize the more than 900 certified addiction treatment programs in New York and will urge patients to first seek “safe and dependable services” right here in New York.[3]

In the February 8 announcement, OASAS also reminded OASAS providers that they are prohibited from receiving referral fees and may not steer patients to a particular substance use treatment program or provider.

Patient brokering is also being recognized on a national level and was addressed by the United States House of Representatives, Subcommittee on Oversight and Investigations, during a hearing entitled “Examining Concerns of Patient Brokering and Addiction Treatment Fraud” on December 12, 2017.[4] According to one testimony to the Subcommittee, “[r]egulations for addiction treatment providers vary state by stateand in some states regulations are virtually non-existent . . . mak[ing] it hard for families and individuals to identify quality treatment programs, and creat[ing] a fertile environment for deceptive business practices, fraud, patient neglect and, ultimately, treatment malpractice.”[5]

Recognizing that the problems of patient brokering and deceptive advertising practices were seeping into the world of online marketing, in September Google made the decision to restrict substance use treatment ads from appearing in substance use treatment-related search results in the United States and more recently in January expanded these restrictions worldwide. Google hopes the restriction will specifically eliminate ads from deceptive substance use treatment programs and providers.

Further information regarding state and federal efforts to address patient brokering and other fraudulent practices can be found below:


  1. New York started this campaign last year with a series of posters on patient brokering. See N.Y. State Office of Alcoholism & Substance Abuse Servs., Stop Treatment Fraud, https://www.oasas.ny.gov/treatment/StopTreatmentFraud.cfm (last visited Feb. 21, 2018).
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  2. Press Release, N.Y. State Office of Alcoholism & Substance Abuse Servs., The N.Y. State Office of Alcoholism and Substance Abuse Servs. Announces Latest Efforts to Prevent Treatment Fraud & Illegal Patient Brokering: New Pub. Serv. Announcements Highlighting N.Y. State's 900+ Treatment Programs, (Feb. 8, 2018), https://oasas.ny.gov/pio/press/20180208TreatmentFraudPSAs.cfm
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  3. More information is available at https://oasas.ny.gov/index.cfm.
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  4. Letter from Committee Majority Staff, U.S. House of Representatives Comm. on Energy & Commerce, to Members, Subcomm. on Oversight & Investigations (Dec. 8, 2017), http://docs.house.gov/meetings/IF/IF02/20171212/106716/HHRG-115-IF02-20171212-SD002.pdf.
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  5. Examining Concerns of Patient Brokering and Addiction Treatment Fraud: Hearing Before the Subcomm. on Oversight & Investigations of the H. Comm. on Energy & Commerce (N.Y. 2017) (testimony of Douglas Tieman, Caron Treatment Centers), http://docs.house.gov/meetings/IF/IF02/20171212/106716/HHRG-115-IF02-Wstate-TiemanD-20171212.pdf.
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The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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