EDITORIAL: 'Rehab racket' is exposed

It is years and tens of millions of dollars too late, but the state of California now appears to be serious about cracking down on massive fraud in its drug and alcohol rehabilitation treatment programs.

The state has suspended payments to some 38 clinics in recent days and has announced plans to require all clinics that receive public support to be recertified.

The state acted only after reporters from the Center for Investigative Reporting and CNN began asking tough questions. In "Rehab Racket," a joint investigation conducted over the past year, reporters for both news organizations documented widespread fraud in county and state-run drug rehabilitation programs.

They found that clinics certified by the state billed for services never provided. Some clinic operators recruited teenage clients, many of them foster kids in group homes with no history of addiction and no need for services.

They paid people who were not addicted to sit in rehab sessions. They billed for clients who were in jail or dead. They billed for days when they were closed.

Reporters stationed outside a San Fernando clinic last April 4 counted every person that entered the premises -- 30 people in all that day. But a month later, the clinic billed the state for 179 people it claimed it served that same day. And the government promptly paid $6,400, no questions asked.

Even though convicted felons are barred from contracting as Medi-Cal providers, a man convicted in Texas for bilking insurance companies of millions of dollars in staged car crashes ran the San Fernando Clinic for 10 years. Even though he was caught overbilling and improperly billing on two occasions, he kept his certification, receiving $2 million in government funds this year alone. The San Fernando clinic abruptly ceased operations in recent days.

Reporters talked to whistle-blowers who reported abuses but were ignored, sometimes for years. Even when fraud was confirmed, government funds continued to flow. In some cases, payouts were increased.

It's not enough to stop payments to problem clinics, as the state belatedly appears to be doing now. Who in state government or at the county level was responsible for years of lax oversight?

They, too, need to be held accountable. That's why the call by Sen. Ted Lieu, D-Torrence, for an independent probe by the state auditor is warranted.

Of approximately $500 million spent over six years for alcohol and drug treatment programs in California, reporters estimate that at least half was misspent.

It's not just taxpayers who are hurt by such rampant corruption. The extraordinary levels of waste, fraud and abuse uncovered here taint honest operators and all of government.