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Owner of Los Angeles rehab center pleads guilty to $175 million healthcare fraud

The owner pleaded guilty to seven counts of grand theft, five counts of insurance fraud and one count each of identity theft and money laundering.

Jeff Lagasse, Associate Editor

The founder of a Los Angeles drug and alcohol treatment facility pleaded no contest today to running a $175 million fraudulent healthcare billing scheme, according to the Los Angeles County District Attorney's Office.

Christopher Bathum, 58, entered the plea to 14 felony counts: seven counts of grand theft, five counts of insurance fraud and one count each of identity theft and money laundering.

Sentencing is scheduled on Feb. 14 in Department 105 of the Foltz Criminal Justice Center. Bathum faces 20 years in state prison as a result of the plea.

Co-defendant Kirsten Wallace was sentenced in 2018 to 11 years in state prison after she pleaded no contest to 46 felony counts related to the same healthcare billing scheme. Deputy District Attorney Shaun Gipson of the Healthcare Fraud Division said Bathum owned and operated Community Recovery of Los Angeles and other entities in Southern California and Colorado.

WHAT'S THE IMPACT

The two defendants obtained multiple healthcare insurance policies for their clients, using their personal identifying information and falsifying the clients' circumstances to obtain the policies. The patients were unaware that policies had been issued in their name, the prosecutor said.

Bathum and Wallace also billed for former clients after their treatment ended while those clients were still working at CRLA and no longer receiving treatment.

Between June 2012 and December 2015, Bathum and Wallace fraudulently billed an estimated $175 million. In most instances, bills were sent for services never provided. About $44 million was paid out by five insurance companies, the prosecutor said.

Bathum was also convicted last year of 31 felony counts for sexually assaulting seven women at his rehab facilities. Sentencing in that case also is scheduled on Feb. 14.

The cases were investigated by the Los Angeles County Sheriff's Department, the Los Angeles County District Attorney's Bureau of Investigation and the California Department of Insurance.

THE LARGER TREND

A May 2009 study from the Johns Hopkins Bloomberg School of Public Health analyzed providers excluded from Medicare for fraud and abuse, and found that the patients they treated prior to being banned were more likely to be minorities, disabled and dually-enrolled in Medicaid to supplement financial assistance for healthcare.

The findings, published in Health Affairs, highlight the risk that providers committing fraud and abuse could be taking advantage of their more vulnerable patients.

Fraud and abuse can include patient neglect, illegally providing prescription medications, unnecessary medical procedures, deceitful billing practices and using untrained personnel for direct patient care.

Fraudulent medical practice is estimated to cost the U.S. federal government between $90 billion to $300 billion dollars annually.

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com