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New reporting shows that the sober living home scandal resulted in 40 more deaths

The Arizona Health Care Cost Containment System, known as AHCCCS, is Arizona’s version of Medicaid.
KJZZ
The Arizona Health Care Cost Containment System, known as AHCCCS, is Arizona’s version of Medicaid.

The sober living home scandal that rocked Arizona when it came to light in 2023 was one of the biggest in state history. It involved thousands of mostly Native American people who were seeking help for addiction to drugs and alcohol, often picked up on reservations throughout the region and driven to so-called sober living homes in the Valley.

Only, that help often never came. Instead, the providers billed Arizona’s Medicaid Program, or AHCCCS, for services they never provided — to the tune of millions of dollars with no limit.

Now, there’s a class action lawsuit alleging the state was negligent and should be held responsible.

Mary Hudetz, a reporter covering tribal Issues for ProPublica, found the whole thing led to at least 40 deaths — and likely many more. Hudetz published the report alongside the Arizona Center for Investigative Reporting this week, and joined The Show to discuss.

Mary Hudetz
Mary Hudetz/ProPublica
Mary Hudetz

Full conversation

MARY HUDETZ: We did want to start to understand who the victims are. There's been some reporting, mostly owing to lawsuits on individual victims, but I continuously heard from advocates and people affected by this crisis that they wanted to see attention given to the victims and accountability for their deaths.

And the way we went about doing this reporting was to look closely at records from the Office of the Medical Examiner in Maricopa County, which investigates deaths in a lot of cases that are believed to be accidental or homicide.

And so we took that data after filing a public records request, and we're able to decipher through our analysis like who may have died in a part-time living space and then often the medical examiner's notes say very clearly the death happened in a sober living home, and that's how we were able to find the 40 victims and then also to find specifically the man whose story we told in this story this week, which was Jeffrey Hustito.

LAURAN GILGER:  Yeah, tell us about him. You, you spoke with his family, as you said, and this is a tough story. Like he was finally getting treatment it sounded like from his family's perspective, they were glad.

HUDETZ: Yeah, his family is one of multiple that I've spoken to. And a lot of his story, I feel is representative of what I heard from many families. Of course, he entered treatment in the Phoenix area in 2021, made a decision to enter treatment for alcoholism. And that was a decision that made his family very happy. I think, listeners who may have a loved one who's also dealing with addiction will understand what it means when their family member decides they're ready to get, you know, really want to do the work to get well. And so, they were, as they told me, thrilled.

And of course, within a matter of months, they started to see that it wasn't working, he was struggling in ways that yet, I think one of the key things is that they were in the dark to the fact that there was this burgeoning fraud crisis happening, and they had no way, no knowledge or tools to understand that the extent to which they might want to intervene.

GILGER: Right. And when you say like the 40 deaths that you were able to tally here, there's likely many more, how many more, like this, this was, this scandal was extensive.

HUDETZ: Yes, it was extensive. The state says there are at least 300 providers who may have billed fraudulently, thousands of people recruited into the homes, that's according to what Access has told us in the past. And I would say advocates such as Reva Stewart, who has been doing outreach with the community to work with those who are affected, believes there could be hundreds, if not more victims.

GILGER: I want to talk about the state's response to this, right? You're also digging into what was going on at the state level as these people were sometimes dying.

The Hobbs administration has pointed to the Ducey administration saying, you know, this happened under their watch, but your reporting shows that they also sort of fumbled, as you, as you call it, the response to this. Tell us how.

HUDETZ: Yeah, you know, the Hobbs administration came into office in January of 2023. It seems like they started to piece together over the following month. They knew, I think, to some extent that there was fraud happening, but understanding the scale and scope of it took them some weeks, according to the governor's office.

From there, they started to take action to develop a response. They attribute, like the fact that it's a very complex scheme to wanting to create a response that was probably like met the moment, met the scale of the fraud. But we did find, for instance, that there seemed to be a bit of a pause or stalling around setting a rate on how much providers could collect.

Providers could bill unlimited amounts of money to Medicaid. So by setting a cap on how much people could claim, then that would start to sort of de-incentivize the fraudulent billing. You know, we weren't able to receive an explanation from AHCCCS, the state Medicaid agency as to why its director held off on setting a cap on those reimbursement rates in the spring of 2023, but records show that that is something that happened before a couple of weeks later, the rate was then capped.

GILGER:  What has AHCCCS had to say about what you found here? What has the state said in response?

HUDETZ: AHCCCS has limited comment in response to our reporting. They are citing the class action lawsuit as a reason, which is common. Many agencies, if they're facing litigation, will withhold comment. The governor's office has said that they wish the Ducey administration had given them more information during the transition. Ducey's spokesperson has their own response to that.

But I mean, I would say since May of 2023, the state has been taking a lot of action, very publicly to try to, you know, root out bad providers by suspending payments to them, conducting investigations, creating a hotline for people who may have been in fraudulent facilities and needed to return to their homes.

You know, and all that said though, I guess that kind of takes me back to like the main focus of the story that amid all those efforts, there hadn't actually really been much, as far as we know, any communication or outreach to the victims, the victims' families, the families of people who died.

GILGER: They have not heard from the state at this point?

HUDETZ: Yeah, you know, an example of the Hustito family, which again, is a representative of what I've heard from every family I've interviewed so far, is they've just never heard from the state at all. Jeffrey Hustito passed away in December 2022, and it really wasn't until the spring of 2023 that this crisis was understood a bit more fully.

And I think, in a case like that, I think families are piecing together what happened to their loved one on their own or still very much in the dark regarding information to their loved one's death.

KJZZ News reached out to AHCCCS for comment. AHCCCS responded with the statement:

"AHCCCS values the work of the AZCIR/Propublica and their attention to this very important issue. Governor Hobbs and State Agencies have acknowledged the pain and suffering associated with the behavioral health fraud and remain committed to working with Tribal partners and law enforcement to protect AHCCCS members.

An agency response will be shared directly with the article’s authors to correct the record and provide additional clarity on Director Heredia’s leadership and role in combating this fraud. AHCCCS is a different agency today. Under the Director’s leadership and in collaboration with the Governor, AHCCCS has reorganized, implemented significant reforms, and continues to evaluate the best ways to serve its members and to improve program integrity."

KJZZ's The Show transcripts are created on deadline. This text is edited for length and clarity, and may not be in its final form. The authoritative record of KJZZ's programming is the audio record.

Lauren Gilger, host of KJZZ's The Show, is an award-winning journalist whose work has impacted communities large and small, exposing injustices and giving a voice to the voiceless and marginalized.
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