PHOENIX — Arizona's state agencies failed to take action against scammers who were preying upon Native Americans and "illegally" profiting off them before vulnerable victims ended up dead, according to new lawsuits filed in Maricopa County.
The massive fraud committed against the Arizona Health Care Cost Containment System has resulted in several criminal indictments, the loss of millions of dollars and calls for reform into how Arizona oversees the licensing of sober living homes.
But now a Valley law firm is seeking to obtain justice on behalf of two Navajo men who were allegedly targeted by "bad actors" seeking to cheat Arizona's health care system.
The BrewerWood firm has recently filed two wrongful death lawsuits against Arizona's health agencies for missing several red flags as a "tidal wave" of treatment centers and sober living homes started popping up across the state.
"They should have caught it early on," said attorney Dane Wood.
The lawsuits mention a 100-page memo submitted to the Arizona Attorney's General Office in February 2022 that described in detail how vans would pick up Native Americans and deliver them to unlicensed homes in order to bill AHCCCS.
State officials announced in May 2023 they were immediately cutting off AHCCCS payments to over 100 medical providers suspected of committing fraud -- a full year after the AG's office was allegedly warned about the scheme, according to the lawsuit.
"Despite actual knowledge of widespread fraudulent billing practices and illegal schemes, defendants... continued to pay exorbitant rates and amounts of money to entities that were falsely claiming to be substance abuse treatment providers and ancillary providers," the lawsuits state.
State agencies allegedly knew about the massive AHCCCS fraud and exploitation of Native Americans long before the February memo since the same scheme had previously surfaced in neighboring Nevada, the lawsuits allege.
In the wake of the scandal coming to light, the Navajo Nation issued a public health emergency after realizing that hundreds of Native Americans had potentially been released onto the streets of metro Phoenix by sober living homes.
One member of the Navajo Nation, 32-year-old Fernando Largo, was found dead from an overdose in a Mesa hotel room in March 2023, two months before elected officials held a press conference announcing the statewide fraud.
According to the lawsuit, Largo was found in a room registered to Opportunity Changes, an alleged "sham entity" that lacked the qualifications to treat Largo's substance abuse problems.
Public records show the Arizona Department of Health Services attempted to conduct an inspection of Opportunity Changes on Jan. 10, 2024, but the facility's doors were locked, the lights were off, and nobody answered the phone.
The second lawsuit was filed on behalf of 44-year-old Carson Leslie, who was found dead in September 2022 in a Phoenix neighborhood after he was allegedly picked up by group home workers in Flagstaff.
Leslie was intoxicated at the time and was not in a position to decide whether he wanted to voluntarily get into a van and be driven to Peoria for treatment, the lawsuit alleges.
Both lawsuits allege Leslie and Largo were "prime targets" because their Native American heritage would have afforded "top-of-the-line" payment rates from AHCCCS.
A big loophole that allegedly allowed the health care fraud to easily proliferate was a lack of verification conducted by state agencies. Attorneys Dane Wood and John Brewer said other government agencies require entities to show proof of insurance, which can be a lengthy and thorough vetting process.
But the state's health agencies were not mandating the same level of verification from applicants, the lawyers said.
"The loopholes, mismanagement, incompetence, indifference, and sheer lack of oversight by defendants... caused and created a proverbial 'tidal wave' of easy and false billing opportunities for fraudsters," the lawsuit states.
A spokesperson for AHCCCS, one of the agencies listed as a defendant in the lawsuits, declined to comment on the pending litigation. Last summer, AHCCCS announced it was implementing new protocols to thwart deceptive billing practices.
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