DOJ confirms $16M settlement with KY's Addiction Recovery Care over fraud claims

Taylor Six and Alex Acquisto, Lexington Herald-Leader on Jul 27, 2026

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The U.S. Department of Justice confirmed it has reached a multimillion-dollar settlement with a Kentucky-based drug treatment provider to resolve allegations the company defrauded the state’s Medicaid program.

Addiction Recovery Care announced July 16 it had agreed to settle with the DOJ over claims of Medicaid fraud. However, at that time, neither the DOJ nor United States Attorney’s Office would confirm the settlement.

In a Monday press release, the DOJ said this settlement “resolved allegations” that ARC violated the False Claims Act, a federal statute that prohibits the submission of false claims for payment to government programs, including the Medicaid program.

ARC agreed to pay more than $16.2 million to settle the claims, according to the DOJ.

Earlier this year, a draft settlement was released as part of a separate, civil lawsuit that showed ARC was expected to pay $28 million.

The government’s civil investigation began in April 2023 when current and former employees at ARC filed a qui tam complaint alleging that ARC submitted fake claims for payment. Under the False Claims Act, a citizen can file a civil claim on behalf of the United States in order to bring allegations of fraud to the government’s attention, the DOJ release said.

While the government was investigating, ARC self-disclosed it should not have billed for some of the services, including services that were mentioned in the qui tam complaint, according to the Department of Justice.

The government alleged ARC misrepresented the qualifications of some of its clinicians in order to receive higher reimbursements from Medicaid.

Between January 2018 and March 2024, services such as psychotherapy, psychiatric evaluations and mental health assessments were provided by non-clinicians but billed as if they had higher-level licenses, according to the DOJ.

ARC allegedly took part in “upcoding” by billing for individual therapy sessions, but instead providing group therapy sessions, the DOJ said. Individual therapy is paid at a higher rate under Kentucky Medicaid.

The government also alleged ARC affiliates billed duplicate office visits to Medicaid and billed for visits that were already reimbursed under a duplicate rate between January 2019 and December 2024.

“One of ARC’s affiliates also allegedly charged for care management services that did not meet Kentucky Medicaid’s coverage requirements, including services performed by ARC employees who lacked the necessary credentials,” the DOJ release states.

The government said the original amount that ARC was expected to pay was negotiated down due to “the defendants’ financial conditions and prospects for ongoing operations.”

ARC faces additional ongoing civil complaints through private loan companies that allege ARC and its former CEO, Tim Robinson, failed to repay tax credit loans.

In early June, Robinson was indicted for wire fraud and money laundering. Multiple creditor companies have sued Robinson for defaulting on repayment plans, alleging Robinson used the money to keep his company from going bankrupt. He stepped down from his leadership role at the company shortly after and has pleaded not guilty to those charges. His trial is scheduled for Aug. 10.

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