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Health Net said in court documents that claims filed by rehab centers in Arizona soared because of widespread fraud

Health Net's PPO plans paid $2.4 million to all Arizona rehab centers in 2014. Those payments soared to $47.4 million in 2015

Those plans paid more for rehab care that year than all other types of care in Arizona, including typically expensive medical care such as cancer, heart disease and child births, according to the insurer’s counterclaim.

Here’s how the fraud worked, the insurer said in its counterclaim:Brokers would scout out people in 12-step programs, Alcoholics Anonymous meetings, homeless shelters and jails, then refer these clients to the “highest-bidding clinic.”Clinics that were not part of the insurer’s network paid clients’ insurance premiums and out-of-pocket costs such as deductibles and co-payments.The result was that people secured Health Net coverage “arranged and bought for them by financially-interested providers for one purpose only: to obtain coverage for the limited time needed to rack up millions of dollars in substance abuse treatment.” Some clinics misrepresented the home addresses of patients, many of whom lived out of state. 

“a sophisticated fraud involving the fraudulent enrollment of non-Arizona residents,” who signed up for Arizona insurance policies. 

misrepresenting their home address

Clean Adventures staff member told him to list the rehab facility's address on his insurance application.

put him in contact with an insurance agent who suggested using Clean Adventures' address on his insurance application

The insurer named 10 other examples of people who lived in California, Indiana, New Jersey, New York, Tennessee and Wisconsin but represented that they lived in Prescott or Scottsdale.

The insurer also said the rehab centers engaged in fraudulent billing, charging for services that were not medically necessary or in amounts that exceeded what the plan allowed.

A 2008 law called the Mental Health Parity and Addiction Act requires insurance plans to provide equitable coverage for substance abuse and addiction treatment. The Affordable Care Act also requires health insurance plans cover essential health benefits, including behavioral health services, and it forbids insurers from denying coverage to individuals based on existing medical conditions.