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In Turnabout, N.Y. Moves to Shut Troubled Rehab Clinic

Records show state officials knew for years about problems at New York Service Network, including allegations of overbilling and violations of patients’ rights exposed by a ProPublica investigation.

A former client of the New York Service Network stands in front of the outpatient chemical dependency clinic in Brooklyn, N.Y. (File, Melanie Burford for ProPublica)

When ProPublica first wrote about the Brooklyn drug rehab program New York Service Network (NYSN) last September, the outpatient facility only six months earlier had won a fresh license renewal from the state agency that oversees such clinics.

Within days of our story, which detailed allegations of falsifying records, padding counseling sessions and paying kickbacks to get patients from unlicensed sober homes, inspectors for the New York Office of Alcohol and Substance Abuse Services (OASAS) returned to the facility for another look.

ProPublica has now learned that the agency is moving to revoke NYSN's license.

In a Feb. 11 letter and report to NYSN's owner, the agency explains what investigators found. The agency's report lists six separate categories of violations, ranging from infringing on patient rights to failing to determine what treatment they needed. Patients were required to attend at least five counseling sessions a week regardless of their individual clinical needs. The inspectors found cookie-cutter treatment plans in the files they reviewed instead of plans tailored to individual patients. Program notes were incomplete or not consistent with actual patient experiences.

The eight-page inspection report spends a full page on its finding that NYSN inappropriately shared patient information with unlicensed sober homes. In New York City, these residences are places where indigent alcoholics and addicts typically live four or more to a room while they undergo treatment. Beds squeezed into closets, vermin infestations, fire hazards and drug-dealing house managers were some of the problems an investigation last year by John Jay College of Criminal Justice found at the homes. As a condition of staying in the sober home, addicts are often forced to attend specific clinics or be evicted.

These unregulated sober homes fill a vacuum created by a lack of affordable housing for recovering addicts, many of whom are fresh from prison or jail, tenant advocates say. The city sends $215 monthly rent stipends for the addicts directly to the sober home operators. The stipend amount was last raised in 1988.

For years, allegations have existed of kickbacks from rehab clinics and the sober home operators who provide them with patients. NYSN's relationship with sober-home operators, which ProPublica found had furnished nearly all its clients, helped the clinic become the seventh-busiest, non-methadone-dispensing outpatient drug treatment clinic in New York City in 2011, state records show. The clinic saw nearly 1,000 patients that year. In 2012, it billed Medicaid for $3.2 million.

"[T]he [sober home] residences were not certified to deliver any clinical or treatment services and there was no justifiable clinical reason to share any patient information with any uncertified residence," according to the OASAS inspection report.

State inspectors interviewed patients who expressed frustration that as a condition of their housing they were forced to attend NYSN. The findings echoed complaints in OASAS files as well as those made by Lillian Imbert and other patients interviewed by ProPublica for our initial story.

A spokeswoman for OASAS would not comment on the specifics of the case against NYSN but confirmed that the clinic owner has requested an administrative hearing to contest the revocation.

Reached at his medical office, Lazar Feygin, a physician who is NYSN's owner and chief executive officer, declined to comment.

OASAS had renewed NYSN's operating license in March 2013, extending it for a two-year period. If the agency is concerned about a program it can make the time of a license recertification as brief as six months. In its license review, OASAS found numerous problems, but in what is a typical process, NYSN crafted and submitted a Corrective Action Plan.

NYSN still owes the state Medicaid program nearly $1 million for previous Medicaid billing violations. In 2010, an audit by New York's Office of Medicaid Inspector General uncovered serious recordkeeping irregularities at the clinic. State officials ordered NYSN to give back $2.5 million in Medicaid "overpayments" — nearly half the claims from 2003 to 2007. The money has been gradually repaid over time by withholding part of NYSN's billings.

If the clinic ceases operation and the inspector general cannot recover the funds, the case will be referred to the Civil Recoveries unit of the Office of the Attorney General, according to a spokeswoman for the inspector general's office.

OASAS has been aware for years of many of the problems it now cites as justification for rescinding NYSN's license. In 2010, NYSN's program manager told an OASAS investigator the clinic had a "contract/agreement" with sober homes. The investigator determined the arrangement was improper, and the findings were conveyed to the attorney general, according to a spokeswoman for OASAS.

The attorney general's office declined to comment.

Asked why OASAS had not moved to revoke NYSN's license sooner, agency spokeswoman Jannette Rondo said in an email that it is "practice for OASAS to refer matters to other investigative agencies, and defer specific action during the pendency of the resultant investigations."

According to Gary Butchen, an outpatient program operator who is also a past president of the Addiction Treatment Providers Association of New York State, OASAS does not consider the sober home situation its problem.

"Their position for years has been that it's a housing issue, and they are not in the housing business," he said.

Butchen believes that closing down NYSN will do little to fix the broader problem. Sober home operators will just go to the next willing provider, he says. "[The operator] will just say 'I can give you 100 patients a day, and all you have to do is give me something on the side,'" Butchen said.

State legislators are pushing a bill that would create a pilot project to regulate and certify sober homes in Suffolk County on Long Island. "Everyone who is interested in improving the standard of sober homes are very well aware of the need for OASAS to step up and do more," said Sen. Lee Zeldin, R-Shirley, a lead sponsor of the legislation.

OASAS is also in the process of revoking the license of another Brooklyn clinic that serves a similar population of poor and indigent addicts.

State authorities have been investigating Canarsie Aware since at least 2009. That year they found that the program was forcing all its patients to attend the clinic seven days a week regardless of their individual needs. The next year, the Medicaid Inspector General's office looked at billings from 2003 to 2007 and determined the facility owed the state $6.7 million from overpayments. (The office said last week that Canarsie currently has "no open collection actions.")

OASAS forced the program to accept a monitor, who was employed from June 2010 to October 2010. In 2011, an investigation by the New York City Department of Health and Mental Hygiene triggered another review that found similar problems as well as new ones involving the program's mental health practice and its relationship with a licensed residential treatment facility.

OASAS went back into the clinic in November and December of last year. "Canarsie provided services to patients that were not clinically justified," investigators wrote in a report.

Anthony Cornachio, the executive director of Canarsie Aware, did not respond to requests for comment.

Last December, four years after its initial investigations, OASAS moved to revoke Canarsie Aware's license. Cornachio has requested an administrative hearing to challenge it. The hearing is scheduled for May 20.

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