Operators of Day Treatment Program for Children Agree to $15.2 Million Civil Judgment to Resolve Medicaid Fraud Allegations

LEXINGTON, Ky. - The operators of a day treatment program for children with behavioral and mental health needs have agreed to a civil judgment of $15,248,240.66 in favor of the United States to resolve allegations that they defrauded the Kentucky and Ohio Medicaid programs.

The judgment, announced today by the U.S. Attorney's Office, is part of a civil settlement resolving allegations that Recovery Center of Kentucky, LLC, Recovery Center of Ohio, LLC, Recovery Center of Maryland, LLC, their parent company, Recovery Center of USA, and CEO, Dr. Warrick Stewart, violated the False Claims Act, a federal statute that prohibits the submission of false claims for payment to Government programs, such as Medicaid.

According to the settlement agreement, Recovery Center of Kentucky and Recovery Center of Ohio operated the Aspire Day Program, which provided day treatment services to children with behavioral and mental health needs in Elizabethtown, Lexington, Louisville, and Radcliff, Kentucky and Cincinnati, Ohio. Day treatment services for children typically include individual and group therapy, among other behavioral health services, and can be provided in collaboration with other activities like education. While the Kentucky and Ohio Medicaid programs cover day treatment, they only pay for children's time spent receiving behavioral health services; they do not pay for any non-healthcare activities. The Government alleged that, from August 2022 through June 2025, the Recovery Centers nonetheless sought Medicaid payments for time spent on children's education, recreation, and lunch breaks at the Aspire Day Program. As a result, the Recovery Centers allegedly received millions in Medicaid reimbursements to which they were not entitled.

Additionally, the Government alleged that Recovery Center of Kentucky falsely represented the qualifications of some of their clinicians on claims to Kentucky Medicaid in order to receive higher reimbursements. According to the settlement agreement, day treatment services provided by lower-level healthcare workers at Aspire Day Program were billed as if they had higher-level licenses. Moreover, some employees did not have the qualifications to provide day treatment services at Aspire Day Program at all, but Recovery Center of Kentucky nonetheless billed Medicaid as if the services were provided by a licensed professional.

The Government alleged that the parent company, Recovery Center of USA, and CEO, Dr. Warrick Stewart, are liable for these false claims because they directed Recovery Center of Kentucky's, Recovery Center of Maryland's, and Recovery Center of Ohio's compliance with federal healthcare programs, staffing decisions, and submission of claims to Kentucky and Ohio Medicaid.

"Vulnerable populations, like children who need behavioral health services, deserve to be treated by qualified clinicians," said Jason Parman, First Assistant United States Attorney for the Eastern District of Kentucky. "Our office is committed to investigating behavioral healthcare fraud to ensure that Kentuckians receive necessary medical care and that Medicaid programs only pay for covered services."

"HHS OIG remains committed to combatting Medicaid fraud and enforcing compliance with billing requirements," said Susan Edwards, Chief Counsel to the Inspector General at the Department of Health and Human Services Office of Inspector General (HHS OIG). "In connection with today's settlement, Recovery Center has entered into a five-year Corporate Integrity Agreement with HHS OIG. This agreement imposes strengthened compliance obligations to ensure Recovery Center establishes and maintains robust systems that protect Medicaid funds and uphold the delivery of appropriate, compliant services to beneficiaries."

The civil judgment will be satisfied by the terms agreed to in the civil settlement agreement based on Defendants' limited ability to pay, including remitting payments from Defendants' future distributions and terminating ownership rights to some of Dr. Stewart's property.

The civil judgment and settlement agreement resolve a lawsuit brought by private citizens under the qui tam provisions of the False Claims Act. Under those provisions, a private party can file a civil action on behalf of the United States, thereby bringing allegations of fraud to the Government's attention, and share in any financial recovery. As part of this resolution, the individuals who filed the qui tam complaint are eligible to receive a portion of the settlement proceeds. The civil case is captioned United States ex rel. Harned, et al. v. Aspire Day School, LLC, et al., Case No. 3:23-cv-41-GFVT.

The investigation was conducted by investigators from the United States Attorney's Office for the Eastern District of Kentucky. This matter was handled by Assistant U.S. Attorney Meghan Stubblebine, with assistance from the U.S. Department of Health and Human Services' Office of Inspector General, the Kentucky Attorney General's Office, and the Ohio Attorney General's Office.

The claims resolved by the settlement are allegations only; there has been no determination of liability.

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