22 charged in Arizona Medicaid fraud case involving $60M scheme

Arizona prosecutors have indicted 22 people — including operators of a behavioral health company and a church — over an alleged $60 million Medicaid fraud scheme tied to addiction treatment and sober living homes.

Arizona prosecutors have indicted 22 people — including operators of a behavioral health company and a church — over an alleged $60 million Medicaid fraud scheme tied to addiction treatment and sober living homes.

According to the indictment announced Tuesday, Happy House Behavioral Health LLC billed the state’s Medicaid program, AHCCCS, for services that were never provided, only partially completed, or for clients who were deceased or incarcerated.

Authorities say the company worked with unlicensed sober living homes, which referred clients in exchange for payments — a violation of Arizona law. The Medicaid funds were then funneled back to the homes, creating what investigators describe as a kickback-style operation.

Among the most striking details is a money laundering charge involving Hope of Life International Church, which allegedly received a $5 million payment from Happy House in July 2023. The church later transferred $2 million of that to an entity in Rwanda.

In a statement, the church denied any wrongdoing, saying the money was accepted as a good-faith donation from a licensed tenant.

“The church’s only relationship was that of a landlord and, later, as a recipient of a donation — a donation accepted in good faith,” the church said.

The charges include conspiracy, fraud, forgery, theft, and money laundering. The Arizona Attorney General’s office says this is part of a larger crackdown on fraudulent sober living operations, many of which have targeted Native American communities.

Over the past year, more than 100 individuals and companies have been charged in similar cases. State officials say the scam has left an unknown number of tribal members — particularly from the Navajo Nation — homeless in Phoenix after fake rehab centers closed and evicted residents.

Some individuals were reportedly picked up in unmarked vans and transported from remote parts of the reservation to the city under false promises of treatment.

Payments to more than 100 healthcare providers have now been suspended as the state works to root out systemic abuse in the addiction treatment sector.

The investigation is ongoing, and state officials say more indictments may follow.

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