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Last April, the Department of Veterans Affairs (VA) secured a $19.75 million fraud settlement with Seabrook, a major addiction treatment center in New Jersey. Between 2022 and 2024, Seabrook allegedly misrepresented its offerings, falsified its records and provided services by staff who were unqualified to treat patients with these disorders.
The facility’s laundry list of misdeeds reveals a troubling, deeper reality: Unscrupulous, predatory facilities are brazenly exploiting vulnerable veterans in need of mental health and substance use disorder treatment while defrauding American taxpayers. These profound failures alone should be a wakeup call to Congress.
This week brought further troubling developments when the VA’s Office of Inspector General (OIG) released a scathing report revealing widespread exploitation of the department by residential treatment programs. The investigation uncovered a system where facilities in 36 states overseen by UnitedHealth Group’s Optum operate without daily reimbursement caps in place. Some facilities invoice as much as $7,000 per day, with the VA, on average, paying more than double the standard Tricare reimbursement rates for identical services. Beyond the inflated pricing, investigators discovered that many private residential facilities extend veterans’ treatment stays for a full 45 days – a practice the OIG characterized as “lengthening the duration of veterans’ stays needlessly.”
The two reports come at a particularly opportune moment. Congress will soon consider the Veterans’ ACCESS Act, which will funnel more veterans to private residential substance abuse and mental health treatment programs. While improving access to vital services is crucial, the OIG reports demonstrate why far stronger safeguards must be added to the legislation.
Lawmakers argue the bill will “increase access to life-saving treatment programs for veterans with mental health conditions or addiction.” These are worthy goals. However, without ironclad quality and cost controls, Congress risks sending more veterans into potentially harmful situations at facilities – like Seabrook – that promise specialized care but deliver substandard treatment.
Residential treatment is a booming industry of more than 5,000 facilities operating nationwide with inconsistent oversight. The result is a gold rush for fraudsters providing subpar care. Take the South Florida addiction center that fraudulently billed the government $112 million for services never furnished or medically unnecessary, while paying kickbacks to patient recruiters. Two other Florida facilities engaged in multimillion-dollar schemes of providing ineffective and needless medical treatment and tests.
The same infractions occurred with an Ohio residential rehab center. In Arizona, one rehab facility was found guilty of bogus billing for services never rendered, and hundreds of others were found to have subjected susceptible victims to shoddy addiction treatment. These cases represent just the tip of the iceberg.
To its credit, the ACCESS Act takes modest steps toward assuring private care quality by requiring accreditation be obtained from either the Commission on Accreditation of Rehabilitation Facilities (CARF) or The Joint Commission (TJC). But this is a half-measure. Until very recently, the VA mandated accreditation from both these recognized organizations, and Congress should ensure this dual standard prevails in VA and the community.
Other quality measures in the bill create an illusion of accountability. Despite laudable language about assessing evidence-based treatment delivery, clinical outcomes, practitioner to resident ratios and military cultural competence training, the legislation is toothless regarding enforcement. Providers face no requirement to meet benchmarks, nor consequences for failing them.
Crucially, there’s no mandate that the data collected on program-specific quality metrics be shared with veterans weighing their treatment options. Veterans need transparent information about facility effectiveness in addressing health concerns, as do the taxpayers funding this care.
Further, there’s no mandated VA utilization review once a veteran enters a community program. This essentially rubber-stamps long stays without the customary practice of assessment and approval for extended care. It’s an invitation for the kind of fraud and waste that the OIG found.
America manages a precarious two-tier system where vulnerable veterans can receive dramatically different care depending on the program. Exploitation flourishes when expectations are low.
Lawmakers must ensure that private residential facilities receiving government funding meet the identical rigorous quality, length of stay and cost standards as VA facilities. Otherwise, veterans will continue to be the cash cow for treatment center profiteers. As the OIG also warned, the VA’s overpayment for services “could divert resources that would otherwise be used for veterans’ health care.”
Our veterans deserve a uniform, high standard of care – not a system that puts revenue before recovery.
Russell B. Lemle is a senior policy analyst for the nonprofit, nonpartisan Veterans Healthcare Policy Institute.
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