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Owner of Now-Defunct Treatment Chain Faces Fraud Charges

November 18, 2019

The owner of a now-defunct chain of addiction treatment centers in Orange County, California, has been indicted by a federal grand jury on charges of conspiring to commit healthcare fraud and mail fraud by teaming with two co-conspirators to fraudulently enroll clients in Affordable Care Act health plans.

Starting in or around December 2014, Jeffrey Yates, owner of the former Morningside Recovery, allegedly conspired with Jeffrey White and White’s son Nicholas to engage in a plan to enroll individuals with substance use issues in ACA plans that offered the highest reimbursement for residential treatment services, even though the patients were not residents of the offering states, according to the indictment, which was released last week.

Among the accusations in the indictment:

  • Yates and the Whites conspired to identify potential clients in need of treatment, but either had no insurance or were enrolled in a plan not desirable to Morningside.
  • Yates directed Morningside staff and senior management to refer the patients to the Whites or entities associated with the father and son duo.
  • Yates directed employees to tell the Whites which states’ plans would offer the most favorable reimbursement.
  • Jeffrey and Nicholas White enrolled patients in the desired health plans, using false patient information, including incorrect addresses, to meet ACA plans’ requirements.
  • After an agreed-upon period, Yates directed Morningside employees to pay referral fees to Jeffrey White.

Last year, Jeffrey and Nicholas White each pleaded guilty to charges of conspiracy to commit healthcare fraud, admitting that their scheme netted more than $27 million in losses for ACA plans across the country, according to an Orange County Register report.

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