More than two dozen behavioral health providers are suing the state of Arizona, alleging they were unfairly targeted in an investigation that uncovered billions of dollars in Medicaid fraud.
In a lawsuit filed Jan. 29, 32 individual behavioral health providers alleged they had been unfairly suspended from the state's Medicaid program, or had payments denied by the state's Medicaid program.
In 2023, Arizona began investigating fraudulent substance use treatment providers, according to ProPublica. Fraudulent providers targeted Native American patients, who received insurance through the American Indian Health Program. Unlike other Medicaid programs, the program allows providers to set their own rates and bill the state.
Fraudulent providers did not provide adequate treatment, and some held patients against their will, according to ProPublica. Arizona officials estimate the scheme cost the state as much as $2.5 billion.
The plaintiffs in the lawsuit alleged they were suspended from the state's Medicaid program unfairly. Many of the plaintiffs in the lawsuit are Black or Hispanic, according to the Arizona Republic. Ben Crump, a civil rights attorney leading the case, said the plaintiffs were "300 times" more likely to be denied payment than non-minority providers, according to the Arizona Republic.
A September report from ProPublica found some patients struggled to find care after many providers were suspended from the state's Medicaid program. At least 30 providers later had their standing reinstated, according to the report.
In December, a class-action lawsuit was filed against the state of Arizona on behalf of 7,000 Native American people harmed by the fraud scheme.
A spokesperson for the Arizona Health Care Cost Costainment System, the state's Medicaid agency, told the Arizona Republic it has not reviewed the allegation in the lawsuit filed by the providers.
"We remain focused on sustainable solutions that prioritize member health and safety, and a strong and stable provider network," the spokesperson told the Arizona Republic. "We continue to collaborate with law enforcement and Tribal partners to protect the populations we serve."