Arizona Gov. Katie Hobbs announced new actions against more than 100 medical service providers for defrauding the state and targeting vulnerable populations, particularly people in Arizona’s tribal nations.
During a May 16 news conference, Hobbs said these service providers targeted vulnerable people struggling with homelessness and addiction and promised them food, treatment, and housing at group homes and rehabilitation facilities.
“People are then left in these facilities without proper access to health care and treatment services,” Hobbs said. “Instead, they’re allowed and sometimes encouraged to continue using drugs and alcohol.”
Once in the facilities, the victims are often not allowed to leave or contact their relatives, she said, all while the providers continue to bill the Arizona Health Care Cost Containment System (AHCCCS)—Arizona’s Medicaid program—for services.
These providers defrauded the state out of hundreds of millions of dollars and particularly targeted members of tribal communities, Hobbs said, profiting off their pain and suffering rather than providing real care.
“I have heard stories of the pain and suffering that these exploited individuals have gone through—desperate people struggling with addiction picked up off the street and dropped in a home with drugs, alcohol, and no treatment available,” Hobbs said, adding that the number of people affected could be in the thousands.
Arizona Attorney General Kris Mayes said some providers billed the state for services for “patients’' who were dead, in jail, or clearly not in Arizona at the time, and that this fraud has become one of the biggest scandals in Arizona history.
“Some of these scammers didn’t even bill AHCCCS for people they were in contact with,“ Mayes said. ”They simply purchased lists of names and dates of birth of people and used those to bill AHCCCS.”
Preventing Future Fraud
Hobbs said she’s considering systemic changes to keep this from happening again, but says she won’t entertain any policies that will make it harder for people to participate in Medicaid.“Prior to my administration, AHCCCS had taken a piecemeal approach to targeting these fraudulent providers,” Hobbs said. “Under my administration, this will change. ... Together, we are going to bring about the systemic reforms we need to root out this problem and deliver true accountability.”
Daniel Scarpinato, who served as chief of staff for former Gov. Doug Ducey, criticized Hobbs for taking credit for the crackdown on Medicaid fraud.
“The investigation revealed today has been underway for several years, well before the current occupants took office,” Scarpinato said.
In Gallup, New Mexico, officials are investigating recent kidnappings of Native Americans that are allegedly linked to the medical fraud scheme in Arizona.
“It blew my mind in the sense it raised the hair on the back of my neck because I didn’t know something like that was going on,” Bonaguidi said.
Police say vulnerable Native Americans are being picked up in vehicles in New Mexico and transported across sate lines into Arizona with promises of receiving rehabilitation help.
The Gallup Police Department has looked into 32 reports of missing persons suspected of being taken to the Phoenix area, Gallup Police Chief Erin Toadlena-Pablo told the local news station.
Jasmine Blackwater-Nygren, first lady of the Navajo Nation and a former Arizona state representative, told the Arizona Senate Health and Human Services Committee in February that tribal members were being held in facilities and given alcohol and drugs to prevent them from leaving so the owners of the facilities could bill the state for the services.
AHCCCS will be conducting a third-party forensic audit of all claims submitted since 2019, Hobbs’ office said.
