New Life Lodge agrees to settle charges

The owners of a Burns drug treatment facility have agreed to pay $9.25 million to the state and federal government to settle charges that they defrauded the TennCare program and provided substandard care to patients referred to them over a six-year period.

The settlement announced Wednesday stems from a whistleblower suit filed by a former employee of the New Life Lodge three years ago.

Company officials said in a statement released Wednesday afternoon that "all parties agreed that allegations in the lawsuit have been neither proven nor disproven." They also said that none of the charges in the lawsuit applied to the care of their current patients.

"We dispute the validity of the allegations in the lawsuit, but to avoid the distraction that a protracted legal process would provide, we have agreed to settle this suit," the statement said. "We cooperated fully with the government's investigation; we are pleased it has ended."

The state of Tennessee had charged that New Life, owned by California-based CRC Health, billed for services that were not medically necessary and filed claims for services that were never provided.

The state also alleged that the company failed to provide required services such as admission assessments and treatment plan updates and used staffers who were not properly trained or supervised. It also repeatedly admitted more patients than were authorized by the state, according to the settlement.

The charges followed a series of Tennessean reports centering on the care provided at New Life and the death of three of its patients. Two civil suits against New Life over those deaths are still pending. A third was recently settled for undisclosed terms.

According to the 18-page settlement agreement,the state will get $4.2 million while the federal government will get a little over $5 million. Both the state and federal government will pay the whistleblower, Angela Cederoth, a total of $1.5 million. CRC also agreed to pay $137,500 to Cederoth's lawyers, Mark Downton of Nashville and Graham Prichard of Charlottesville, Va..

Recent filings by CRC with the U.S. Securities and Exchange Commission show that the company had set aside $9.25 million for possible settlement of the state and federal inquiry.

Cederoth worked as an accounts payable representative at the Dickson County facility. For a brief time she was listed as the comptroller of the facility. A Burns resident, she could not be reached for comment.

In a statement announcing the settlement, state Attorney General Bob Cooper said that New Life failed to meet "minimum necessary standards" and used outside pharmacies to double bill the TennCare program. New Life, under its agreement with the state, was supposed to provide those drugs without additional charges.

According to the settlement, the fraud was not limited to referrals the facility received from the Department of Children's Services but also included Medicaid patients covered by the TennCare program.

Following the Tennessean reports on New Life, the state stopped sending patients to the facility and ordered the treatment center to shut down. It reopened in 2012 but at a reduced capacity and with admissions limited to adults.

Last month a settlement was reached in a suit brought against New Life by the family of Lindsey Poteet, who had been under treatment at New Life. Poteet, 29, collapsed in 2010 while being transported in a company vehicle from New Life to a Nashville Hospital. The mother of a then-17-month old child, Poteet died the next day.

Still pending are suits filed by the families of Patrick Bryant and Savon Kinney, two other New Life patients who died.

In its statement, the company said: "Our priority, today and always, is to provide superior, compassionate treatment to our patients suffering from the chronic disease of addiction. Our care model is based on science. Research has identified the treatments that will lead to the best outcomes and we have incorporated those treatments in our programs."

"People seeking treatment for addiction, their families and the professionals who refer patients to us can feel confident that the treatment at New Life Lodge includes the clinical practices that science tells us lead to the best outcomes."

New Life Lodge is one of several drug and alcohol treatment facilities across the country that is owned by CRC, which is owned by Bain Capital.

Reach Walter F. Roche Jr at 615-259-8086