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| Eric Snyder, owner of Real Life Recovery and Halfway There |
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| Kenneth Bailynson, owner of the defunct Good Decisions Sober Living in West Palm Beach |
Federal prosecutors unsealed indictments on Wednesday charging eight people — sober home and drug treatment owners, employees and a doctor — with health care fraud and money laundering in two of the highest profile investigations in the crackdown on corruption in South Florida’s drug treatment industry.
Kenneth Bailynson, owner of the defunct Good Decisions Sober Living in West Palm Beach, and Eric Snyder, owner of Real Life Recovery and Halfway There, both face more than 20 years in prison and forfeiture of millions of dollars and dozens of condominiums and homes if convicted of bilking insurance companies out of more than $50 million for bogus urine drug tests for addicts.
The FBI raids at Bailynson and Snyder’s businesses in late 2014 grabbed headlines and were the first in an ongoing multi-agency federal crackdown on patient brokering and insurance fraud called Operation Thoroughbred.
Bailynson, known for his explosive temper, psychiatrist Dr. Mark Agresti, Stephanie Curran and Matthew Noel, employees of Good Decisions, bilked more than 80 insurance companies out of $31.3 million in bogus drug tests, according to the indictment.
The charges span four years and detail how Bailynson operated his sober home as a cover for a full-service drug testing empire complete with its own lab, a doctor to write prescriptions for drug screens and condominiums to house addicts with insurance.
According to the indictment, Bailynson bought more than two dozen condos in Green Terrace, a dilapidated complex at 2800 Georgia Ave. in West Palm Beach. He offered insured addicts free rent in exchange for their urine and their commitment to attend drug programs where Bailynson received kickbacks from the operators for each addict he enrolled, the complaint says.
Bailynson, Noel, Curran and four unindicted co-conspirators also paid kickbacks to recruiters to bring insured addicts to Good Decisions for housing. Bailynson hired Dr. Agresti, a West Palm Beach psychiatrist well-known in the drug treatment community, as his medical director.
Agresti, in turn, wrote prescriptions for urine drug screens that were not medically necessary and did not use the results to determine appropriate treatment, according to the indictment.
A Palm Beach Post investigation in 2015 detailed how Bailynson took over the condominium complex and turned it into an armed camp, where guards with guns made sure addicts did not leave and nosy residents minded their own business. By the time the FBI raided Good Decisions in September 2014, Bailynson had converted the pool clubhouse into a urine collection site and banned unit owners from entering.
Urine testing is a staple of drug treatment, a fast way to track relapse and gauge use of prescribed drugs. It’s also cheap. Corner drug stores sell $25 tests that will immediately indicate the presence of a drug. However, unscrupulous treatment operators hire doctors to prescribe more complex — and costly — tests that reveal not only the presence of a drug, but how much is in the addict’s system.
The urine of addicts living at Good Decisions was tested at least three times a week. In all, Bailyson’s businesses billed insurance companies for more than $106 million worth of drug tests. The insurance companies paid out $31.3 million.
The other indictment unsealed on Wednesday accuses Eric Snyder, owner of the defunct Halfway There and Real Life Recovery sober home and treatment center in Delray Beach, Paul Materia, Joseph Lubowitz and Christopher Fuller with running a similar operation that raked in $20.1 million from insurance companies for urine drug tests.
Snyder and Fuller were both arrested in July 2017. In a 26-page federal complaint, Fuller was described as a “junkie hunter” hired by Snyder to provide addicts who had insurance for his sober homes and drug treatment center. The document described how Snyder bribed patients with airline tickets, cash, rent and visits to strip clubs. Fuller trolled AA meetings and “crack” motels to find patients, the complaint said.
But prosecutors agreed to hold off on indicting Snyder and Fuller as they tried to negotiate a plea deal with both men. After months of delaying the case, prosecutors went ahead and convened a grand jury, which issued an indictment on June 7.
The indictment describes a multi-state business operation that ensured Snyder’s halfway homes and drug treatment center were full. Lubowitz recruited addicts from his treatment centers in New Jersey and was paid a commission for each addict he admitted to Snyder operations.
Patients’ signatures were forged on sign-in sheets, forms were backdated and fraudulent documents created to make it appear absent patients had attended treatment, according to the indictment. Insured addicts who tested positive were rarely evicted and often urine was collected but not tested. Uninsured addicts were given less costly drug tests, according to the indictment.
Materia ran Snyder’s businesses and was responsible for billing insurance and overseeing lab technicians at the on-site laboratory. In all, Snyder billed insurance companies $58.2 million for urine tests and treatment.
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Ken Bailynson, a former sober home operator described in a federal court on Friday as a serial fraudster, will remain in jail while he awaits trial on charges of money laundering and health care fraud.
Federal Magistrate William Matthewman rejected bond, finding that Bailynson is a flight risk and poses an economic danger to the community. During the two-hour bond hearing, Assistant U.S. Attorney Jim Hayes described Bailynson’s sober home in West Palm Beach, Good Decisions Sober Living, as a “piss farm” that existed “only to harvest residents’ urine” for costly drug tests that were not used in the treatment of recovering addicts.
Between 2011 and 2015, Bailynson’s sober home, treatment program and lab billed 80 insurance companies more than $106 million for urine drug screens. The companies paid out $31.1 million, Hayes said. Of that amount, Bailynson received $14.7 million, Hayes said.
A Palm Beach Post investigation in 2015 detailed how Bailynson took over Green Terrace, a condominium complex on Georgia Avenue in West Palm Beach, and turned it into an armed camp, where guards with guns made sure addicts did not leave and nosy residents minded their own business. By the time the FBI raided Good Decisions in September 2014, Bailynson had converted the pool clubhouse into a urine collection site and banned unit owners from entering.
Urine drug tests are a staple in drug treatment, providing a fast and easy way to determine whether an addict has relapsed. However, unscrupulous drug treatment operators paid doctors to write prescriptions for costly and complex urine drug tests as often as four times a week, billing insurance companies as much as $6,000 per test.
Bailynson compensated residents for bringing in new addicts with trips to Universal Studios in Orlando and discounts on rent. Addicts living at Green Terrace who lost their insurance were evicted, Hayes said.
In some cases, tests were ordered before the results of the prior test had been received and test results were not used in treating addicts, Hayes said. Several residents at Good Decisions had urine drug test bills of more than $1 million, Hayes said. Others racked up bills in the hundreds of thousands of dollars within months, Hayes said.
Although Bailynson shut down Good Decisions shortly after it was raided by the FBI in September 2014, he went back into business, operating a treatment center, lab and sober home through companies created in the names of his girlfriend and former employees, Hayes said. One former employee testified that Bailynson has nothing to do with the business
Bailynson, known for his explosive temper, sat calmly between his two, private lawyers with the law firm of Holland & Knight. Attorney LT Lafferty said Bailynson is not a flight risk because he now has a 21-month-old son and his passport was seized during the 2014 raid. Bailynson also owns dozens of condos at Green Terrace, several apartment buildings in suburban Lake Worth and his home.
As for Bailynson’s expletive-laced tirades, Lafferty said Bailynson is a “typical” guy from New Jersey: “He speaks loudly. He likes to be heard.”
Three other defendants indicted with Bailynson were granted bond. Dr. Mark Agresti, facing health care fraud charges for writing prescriptions for unnecessary drug tests, is free on $250,000 bond. Bail was set at $150,000 for Stephanie Curran, a former employee of Good Decisions. Matt Noel, also a former employee, is free on his own recognizance.
Bailynson will be arraigned on July 31.