Profiteering from drug addiction: a crime

In the United States, almost every aspect of the medical field is controlled by capitalist interests. This is true for its sub-industries as well, including the drug rehabilitation industry. It is composed of drug rehabilitation centers, methadone and buprenorphine clinics, and recovery homes. This complex net of providers and housing services is interconnected.

A memorial for those lost to drug addiction and overdose in New Jersey (Photo:

When a patient enters a rehab facility, they stay for approximately 30 to 90 days, though some stays may be longer, depending on the program. While they’re there, social workers look for housing or for adequate medication-assisted treatment (MAT) programs. At this point, the path diverges: a patient can either go to a methadone or buprenorphine program, or they can enter a halfway house or recovery home. In legitimate programs, this hunt for adequate housing or adequate MAT programs could take the entire length of the patient’s stay.

The costs of MAT programs, rehabs and sober-living homes are incredible. Methadone programs cost hundreds of dollars per visit. Buprenorphine clinics cost the same, although the number of required visits is less than that of methadone treatment. Drug rehab programs often cost between $15,000 to $30,000 for only a 30-day stay. Outpatient drug rehab programs can cost up to $500 per day. Lastly, recovery homes, halfway houses and three-quarter houses — which all fall under the umbrella of “sober living homes” — can cost up to $500 a month. Detox by itself can cost up to $1,000 per day.

Families plunged into debt

With the interconnected nature of the rehab industry, it’s easy to rack up costs of tens or hundreds of thousands of dollars for treatment: first detox, then rehab, then recovery houses and then sometimes medication-assisted treatment. The money for this treatment sometimes comes from families, which puts them into enormous debt to ensure that their loved ones get help. The rehab industry often makes its money from “revolving door” clients, leading families to plunge themselves into even more debt.

But what if the client has Medicaid? To start with, the organizations that manage behavioral health care, which in Pennsylvania include mental health and addiction recovery programs, are separate from ordinary Medicaid providers. Each county has different organizations that handle behavioral care.

In Philadelphia, it is Community Behavioral Health (CBH); in Bucks County, it’s Magellan; and in Dauphin County and surrounding areas, it is PerformCare. These programs do not directly pay for stays in recovery homes. Instead, the local county Drug and Alcohol Commission provides people who need them with scholarships for 30- to 60-day stays in recovery homes. Some of them accept SNAP (Supplemental Nutrition Assistance Program) as rent, using the program’s food stamps to feed the residents.

Only recently, in the face of rehab industry corruption, did Pennsylvania recovery home providers get some form of oversight. In 2017, Senate Bill 446 was passed, later known as Act 59, giving the state’s Department of Drug and Alcohol Programs the ability to oversee and license recovery houses. 

Subpar facilities cause harm

This is a voluntary process, but in order to receive state and county funding, facilities must be licensed. This came too little, too late for addicts in recovery harmed or killed by subpar facilities. This can be seen in the Next Stop Foundation’s operations. Instead of helping addicts to recover, this “foundation,” under the leadership of its founder, David Francis, sold heroin to its residents and caused multiple overdoses both inside and outside the facility. (Legal document at Francis is now serving a 10-year sentence for heroin trafficking and tax fraud. 

When a person enters a recovery home, the life they live becomes regimented. Residents have to attend Alcoholics Anonymous and Narcotics Anonymous meetings. Some homes require Bible study. Everyone must attend intensive outpatient programs (IOP). This is not a problem in legitimate recovery homes; they will send people to wherever they think is the best fit for them. Recovery houses that are not legitimate send people to locations of their choosing and don’t care if individuals fit in or don’t. This is where corruption comes into play.

In Philadelphia and the tri-state area of Pennsylvania, New Jersey and Delaware — where addicts get hooked on opiates like fentanyl and fentanyl analogues and non-opiates like “tranq” (animal tranquilizer xylazine) — these addicts-for-cash or drug-dealing corruption scandals do almost as much damage as do the drugs themselves. They give hope to hopeless addicts, their families and their other loved ones. But what they really do is send addicts to subpar, unhelpful programs in exchange for kickbacks from Medicaid funding.

Illegal kickbacks abound

This can be seen in the case of the Commonwealth of Pennsylvania v. Southwest Nu-Stop Philadelphia Inc. The law prevents providers of services from paying kickbacks for bringing addicts into their facilities. Southwest had been warned by managed-care provider CBH that it was delivering poor levels of care to addicts seeking recovery. It actually became the site of an overdose death. 

Southwest asked for bodies to fill their seats. In exchange, officials paid kickbacks to recovery homes for bringing them there. Dr. Lloyd Reid, facility owner, paid recovery homes $1.18 million after receiving $12.66 million in Medicaid funds. (Legal documents at 

The legal document detailing Southwest’s crimes revealed that the recovery houses that were sending their residents there were also threatening to throw them out if they refused to go to Southwest in favor of other, more reputable services. Both Southwest and Reid pled guilty to Medicaid fraud. This practice of sending addicts to IOPs or rehabs that trip up their attempts to seek recovery also occurs in Florida and California.

If a corrupt facility isn’t using an IOP to get Medicaid kickbacks, it’s using other means to keep addicts in such a state that they need the facility. In Mullica Hill, New Jersey, the staff at Kingsway Recovery Center testified that they contaminated the urine (drug) tests of patients to keep them longer and charge insurance companies higher costs — a crime. 

These body brokers and rehab scammers cause real trauma to families. They know the desperation of the addicts, their family members and other loved ones, and they take advantage of it. They claim they want to help addicts, but, in reality, they only serve themselves.

A needless death

“You shouldn’t have to endure more harm,” said Sarah (assumed name), to this writer about being forced to attend Southwest’s subpar “treatment” program. She knows firsthand how the system uses and abuses addicted people. She lost her son, Tom (assumed name), to addiction during the first phase of the COVID-19 pandemic. Her response to the question of how her son was treated by the system was that he attended some legitimate programs but was sent to the Kingsway Recovery Center.

This was a man who wanted recovery, demanded it even. But he was stuck, because he had been illegally cut off from Medicaid while imprisoned. Kingsway promised that he would get treatment for the “low price of $5,000.” Officials claimed that it was an inpatient rehab location, but in reality it was a recovery house and intensive outpatient program. Tom wanted to be part of a program which had a period of no contact with his outside world. Merely five days after entering this program, he had left treatment and was found dead of an overdose in a bathroom.

Nu-Stop Philadelphia Inc., site of state investigation and an overdose death. (Photo: Philadelphia Inquirer)

This is an example of the system failing Tom, as it fails thousands of people who try to achieve recovery but end up in subpar, substandard, dehumanizing facilities. Sarah and her mother contacted Kingsway to get a refund after Tom died. They received half of their money back, but they were forced to sign a contract saying they wouldn’t criticize the recovery program.

Multimillion-dollar schemes

In three years, Kingsway made millions of dollars off the backs of needy addicts and their heartbroken families. Nicholas DeSimone, Kingsway’s owner, claimed he was not involved in the day-to-day operations of the facility and was operating his business honestly. Michelle DeSimone, his spouse, ran Graceway, a supposedly separate recovery home. 

The DeSimones claimed their businesses were separate — and that even though their methods of billing were complex, they were legal. The New Jersey State Commission of Investigation investigated the facilities and reported that the DeSimones kept transactions under $10,000 to purposely hide money laundering. The couple used the funds they got from needy addicts and their families to fuel an extravagant lifestyle. 

Sadly, the only reason the state is investigating the owners of Kingsway and Graceway — who may face prosecution — is because they were committing insurance and health care fraud and tax evasion. (New Jersey Monitor, Oct. 12, 2022) 

Sarah and her son were just cash payers. The powers that be don’t care much about “junkies” dying. Kingsway’s failures with drug users didn’t garner the attention of New Jersey investigators. 

This is the nature of the rehab-industrial complex. It’s an interconnected web of rehabs, recovery homes, methadone and buprenorphine treatment centers, along with other organizations and forces that, in unison, claim to exist for the benefit of the recovering addict or the addict seeking recovery. People have died and continue to die for the benefit of the capitalist owners and managers of these facilities. This cannot be allowed to continue.

Simple Share Buttons

Share this
Simple Share Buttons