Children’s Medicaid Program Hit With $15.2M False Claims Judgment

The operators of a children’s day treatment program have agreed to a $15,248,240.66 civil judgment in favor of the United States to resolve allegations that they defrauded the Kentucky and Ohio Medicaid programs, according to the U.S. Attorney’s Office for the Eastern District of Kentucky. 

The settlement involves Recovery Center of Kentucky, LLC, Recovery Center of Ohio, LLC, Recovery Center of Maryland, LLC, Recovery Center of USA, and CEO Dr. Warrick Stewart. The government alleged that the entities violated the False Claims Act, which prohibits submitting false claims for payment to government programs such as Medicaid.

At issue was the Aspire Day Program, which served children with behavioral and mental health needs in Elizabethtown, Lexington, Louisville, and Radcliff, Kentucky, as well as Cincinnati, Ohio. These programs may include therapy and behavioral health services, sometimes alongside school or other activities.  

The government alleged that, from August 2022 through June 2025, the Recovery Centers billed Medicaid for children’s time spent on education, recreation, and lunch breaks, even though Kentucky and Ohio Medicaid only covered time spent receiving behavioral health services.  

The government also alleged that Recovery Center of Kentucky misrepresented staff qualifications to obtain higher Medicaid reimbursements. In some cases, services allegedly performed by lower-level staff were billed as if they had been provided by higher-level licensed professionals. In other cases, the government alleged that certain employees were not qualified to provide day treatment services at all.

This case began as a qui tam lawsuit under the False Claims Act, meaning private whistleblowers helped bring the alleged misconduct to light. The docket information is United States ex rel. Harned, et al. v. Aspire Day School, LLC, et al., Case No. 3:23-cv-41-GFVT.

As part of the resolution, Recovery Center entered into a five-year Corporate Integrity Agreement with HHS OIG, requiring strengthened compliance obligations going forward. The civil judgment will be satisfied under terms based on the defendants’ ability to pay.

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