(The Center Square) – Arizona Attorney General Kris Mayes on Tuesday announced 22 new indictments in a widespread Medicaid scandal that reportedly cost taxpayers millions of dollars and left drug rehabilitation clients homeless.
The scandal has involved convicted and alleged Phoenix scammers in multiple fraud cases concerning sober living homes, which serve clients undergoing drug rehabilitation.
In the indictments, the state grand jury is charging Happy House Behavioral Health LLC, Hope of Life International Church and a long list of individuals with various forms of fraud. The 51 counts include fraudulently billing the taxpayer-funded Arizona Health Care Containment System. That’s the state’s name for Medicaid.
The first arraignment for the charges, which were filed in April, was scheduled for Tuesday morning in Maricopa County Superior Court in Phoenix, Mayes said in a news release.
The indictments accuse the defendants of committing the alleged crimes on or between Aug. 31, 2022 and Jan. 5, 2024.
Among other allegations, the indictments accuse Happy House Behavioral Health LLC and other defendants of being paid more than $60 million from AHCCS for services not rendered or partially rendered under billing for deceased, incarcerated and hospitalized clients.
The grand jury also accused defendants of excessive billing and billing under incorrect codes.
Before the announcement of the 22 new indictments, the first person convicted with fraudulent schemes – Ariell Olivia Dix, 37 – was sentenced to 3.5 years in prison in May 2024. Dix, who was ordered to pay more than $3.8 million in restitution, helped to create fake behavioral health treatment centers that defrauded AHCCCS’ American Indian Health Program. She pleaded guilty to illegal control of an enterprise.
Eleven tribal nations and nonprofits across Arizona were hurt by the fraud, Mayes said a news release in early May. Mayes established a $6 million fund for grants up to $500,000 to tribes and nonprofits for compensation, remediation and supportive housing. The Sober Living Home Support Program is funded by the state’s Anti-Racketeering Revolving Fund.
To strengthen regulations on sober living homes, the Arizona Legislature passed Senate Bill 1308, as previously reported by The Center Square. Gov. Katie Hobbs signed the bill into law April 18.
