Arizona cracks down on Medicaid, sober living home fraud targeting Native Americans: 'This is tragic'

PHOENIX - The state of Arizona is cracking down on an alleged Medicaid fraud and a scheme that takes advantage of vulnerable Native Americans.

On May 16, Arizona Governor Katie Hobbs announced new actions to stop fraud and abuse just months after FOX 10's investigative series "Preying on a People" took a deep dive into the actions of unlicensed sober living homes targeting Native Americans.

Hobbs was backed by the state’s attorney general, several indigenous leaders, and the director of Arizona Health Care Cost Containment System (AHCCCS), the agency responsible for paying out what investigators call "significant increases" in billing for outpatient behavioral health services to alleged criminal enterprises targeting Native Americans.

Hobbs called out more than a hundred registered providers of Medicaid services, saying, "that we have credible reason to believe have defrauded the state’s Medicaid program of hundreds of millions of dollars."

The official warning – months after the FBI announced its investigation into whether some sober living homes and group homes are involved in fraudulent billing practices.

"I believe the state of Arizona owes our tribal nations an apology," says AG Kris Mayes. "I don’t think it is too much to say that this is one of the biggest scandals in the history of the state of Arizona when it comes to our government. Our office estimates that is in the hundreds of millions of dollars, it could go higher."

It's a scheme of human trafficking and healthcare fraud.

Some indigenous leaders are calling it "white van syndrome," saying their people are enticed, picked up in vehicles, and allegedly left unsupervised in Valley homes and neighborhoods to use alcohol and drugs.

"They’re OD'ing from fentanyl and I’ll just quickly share my story. We were at a Murdered Indigenous Women and People meeting in December. My phone kept going off during the meeting we were in for four hours, and I didn’t recognize the number and it was my niece. She was calling because her sister was missing and we got word that she might have deceased in a sober living home in Glendale. It took us two days to find her because what they’re also doing is taking them straight to the mortuary instead of the coroner’s," said Lieutenant Governor Monica Antone of the Gila River Indian Community."

Mayes says she will hold the people responsible for these deaths accountable to the fullest extent of the law.

"If we have evidence where individual operators of these facilities are negligent for people dying, we have also heard reports of rapes that have occurred inside these homes, that will also be investigated by the proper law enforcement officials," Mayes said. "This is tragic."

The FBI said it’s believed unlicensed facilities get kickback money from licensed homes that bill AHCCCS. Investigators say the bad actors don’t actually provide the services they’re supposed to.

"We have suspended payments to approximately 100 Medicaid providers based on credible allegations of fraud," said Carmen Heredia, director of AHCCCS.

Heredia was appointed by the governor as the director of AHCCCS last December and is now trying to clean up the mess left behind.

"AHCCCS also needs to be held accountable for allowing this to happen for the last three years," said Thomas Cody, executive director for Navajo Divisional Social Services.

Mayes says the AG's office has indicted more than 40 people, seizing and recovering $75 million over the last few years.

AHCCCS is also doing an internal audit to assess all the financial damage.

You can call 2-1-1 and press 7 for more information and/or to report abuse. You can also visit this website.