Maryland health regulators on Friday said they had ordered an addiction treatment provider to stop seeing patients after an investigation by The New York Times and The Baltimore Banner showed it had placed some of them in apartment buildings where drug use was rampant.
The state’s Behavioral Health Administration issued a “cease and desist notice” to the program, PHA Healthcare, on Dec. 23, three days after the investigation was published.
The article revealed that the company collected millions from Medicaid providing online group counseling sessions. It offered free rooms to people who enrolled, but some of its buildings were effectively government-funded drug houses, where many patients relapsed and sometimes died, the reporters found.
The state’s order said PHA Healthcare had been operating without a valid license since it expired in April. The program was told to notify its patients and either transfer them to other providers or make alternative arrangements “to ensure continuity of services” by Jan. 23. The company can appeal the state’s decision.
The company has also chosen to relocate the patients from its housing, a state Health Department spokesman, Chase Cook, said in a statement on Friday. It has been cooperating with the authorities to ensure that all patients are “transitioned appropriately,” he said.
The company’s owner, Stephen Thomas, had no significant experience providing drug treatment when he started operating the for-profit business in 2020. In the fiscal year that ended in June, the company enrolled more than 720 patients and received $8.5 million from the state for providing counseling services. Mr. Thomas credited its growth to a reputation for client care. Last year, PHA Healthcare’s operators received a grant through the city and a commendation from the City Council for affordable housing.
The investigation traced the deaths of at least 13 people to the company since 2022, including that of a 1-year-old boy who starved after his mother died in the program’s housing. No one from the program had seen the mother for two weeks, a medical examiner’s report said.
Patients described living in poor and unsanitary conditions, where even house managers got high. In recent months, the treatment they received was often group counseling conducted online by people who lived in places like Nigeria and did not appear to be licensed as counselors in Maryland.
State regulators have told PHA Healthcare to stop treating patients at least once before. The state notified the program it would be suspended in December 2022 because its license had expired almost two years earlier. But the state then allowed it to obtain a new license, using a different address, and kept paying it, Mr. Cook said last month.
The Times/Banner investigation showed that state officials for years failed to adequately vet and audit addiction treatment operators, allowing a flood of new programs, some of which used tactics that health officials and other, longstanding providers have described as unscrupulous.
Offering free housing to patients in exchange for enrolling in Medicaid treatment is one practice that health officials have described as illegal, because it violates federal anti-kickback laws, but increasingly common in Baltimore. Mr. Thomas has said the company has housed “many people” who are not getting its treatment.
Reached by phone on Friday, Mr. Thomas declined to comment on the state actions, but he said the reporting by The Times and The Banner caused “a lot of damage.”
“I thought it was very, very unfair, and particularly unfair to the clients that we serve,” Mr. Thomas said, adding there were “hundreds and hundreds of clients who have good stories to tell about PHA Healthcare.”
It is unclear how many patients currently live in the program’s buildings, but winter is typically the busiest season for addiction treatment companies that offer housing. In a 2023 text message to a former employee, Mr. Thomas said PHA Healthcare housed 300 adults and more than 50 children.
Emily Dommartin, a former counselor for PHA Healthcare who said she was fired after raising concerns with Mr. Thomas about the program, said she was glad the state was stepping in, but worried about what would happen to the patients.
“If they’re back on the streets and homeless again, it puts them in their initial situation,” she said. “It can impact their recovery, whatever little recovery they made.”
At least three people enrolled with PHA Healthcare have recently called another treatment provider, looking for new places to live, an official at the other program said.
State Senator Clarence Lam, a physician who teaches at the Johns Hopkins Bloomberg School of Public Health, said that the cease-and-desist order was “long overdue,” and that he supported a full investigation of PHA Healthcare and other possible “bad actors” operating addiction treatment in Maryland.
That people have died while under the program’s watch is “unconscionable,” he said, adding, “This needs to be addressed as soon as possible to make sure no more deaths happen.”
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