In a landmark case highlighting ongoing concerns over fraud in the addiction treatment industry, Casey Mahoney, a 48-year-old operator of addiction treatment facilities in Orange County, California, was convicted this week for orchestrating a scheme involving nearly $2.9 million in illegal kickbacks. The verdict highlights the significant efforts by federal authorities to address fraudulent practices within the healthcare sector, particularly those affecting vulnerable populations.
Casey Mahoney, based in Los Angeles, was found guilty by a federal jury of multiple charges, including conspiracy to solicit, receive, pay, or offer illegal remunerations for patient referrals, as well as several counts of illegal remunerations and money laundering. The conviction stems from Mahoney’s involvement in paying substantial kickbacks to so-called “body brokers” — intermediaries who referred patients to Mahoney’s addiction treatment facilities, Healing Path Detox LLC and Get Real Recovery Inc.
According to court documents and evidence presented at trial, Casey Mahoney’s illicit activities were intricately designed to evade detection. He paid nearly $2.9 million to body brokers, who, in turn, offered cash incentives to patients, sometimes encouraging them to use the money to purchase drugs rather than seek treatment. This cycle of bribery not only defrauded insurance providers but also put patients at risk of exacerbating their addiction.
Elaborate Concealment Tactics by Casey Mahoney
The fraudulent payments were concealed through sham contracts that falsely stated the remuneration structure. These contracts purported to prohibit payments based on the volume or value of patient referrals, yet Casey Mahoney and the brokers negotiated compensation based on the patients’ insurance reimbursements and the number of treatment days billed. The elaborate scheme was further obfuscated by laundering the proceeds through payments characterized as consulting fees to the mother of one of the body brokers.
The conviction of Casey Mahoney is a significant development in the federal government’s ongoing efforts to combat healthcare fraud. Principal Deputy Assistant Attorney General Nicole M. Argentieri, who heads the Justice Department’s Criminal Division, emphasized the importance of holding individuals accountable in the fight against fraudulent practices that exploit the healthcare system. U.S. Attorney Martin Estrada for the Central District of California and key figures from the FBI Los Angeles Field Office and the IRS Criminal Investigation also played crucial roles in bringing Mahoney to justice.
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Implications and Sentencing for Casey Mahoney
Casey Mahoney faces a maximum penalty of five years in prison for the conspiracy charge, up to 10 years for each count of illegal remuneration, and up to 20 years for each count of money laundering. His sentencing is scheduled for January 17, 2025. The exact length of his sentence will be determined by a federal district court judge, who will consider the U.S. Sentencing Guidelines and other statutory factors.
This case comes amid a broader crackdown on fraud in the addiction treatment industry, a sector that has seen significant abuses, particularly with the rise of body brokering — a practice where individuals or organizations receive kickbacks for referring patients to treatment centers. The Eliminating Kickbacks in Recovery Act (EKRA), enacted in October 2018, was designed to address these issues and curb such corrupt practices.
Broader Impact and Enforcement
The Fraud Section of the Justice Department, leading efforts through its Health Care Fraud Strike Force Program, has been at the forefront of this battle. Since its inception in March 2007, the program has charged over 5,000 defendants who collectively billed federal health care programs and private insurers more than $24.7 billion. This case against Casey Mahoney is part of a larger initiative to ensure transparency and integrity within the healthcare system.
In addition to the federal prosecution, the California Department of Insurance provided valuable assistance in investigating Mahoney’s operations. Trial Attorney Siobhan M. Namazi of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Nandor F.R. Kiss for the Central District of California were pivotal in prosecuting the case.
The conviction of Casey Mahoney serves as a reminder of the critical need for vigilance in the healthcare industry. As authorities continue to crack down on fraudulent practices, it is crucial for all stakeholders — from treatment providers to regulatory bodies — to uphold the highest standards of integrity and transparency. As the opioid crisis continues to affect countless individuals and families across the nation, the resolution of this case represents a significant step toward ensuring that treatment resources are used appropriately and that those who exploit vulnerable individuals for personal gain are held accountable.
