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Connecticut Rehab Settles over Fraudulent Insurance Charges

Press Release -

A Connecticut Rehabilitation center has agreed to pay $1,378,533 in civil settlements to the federal and state governments for submitting fraudulent or inaccurate insurance claims. The New Era Rehabilitation Centers located in New Haven and Bridgeport, CT provides Methadone maintenance services to Medicaid patients.

New Era provides Methadone maintenance for Medicaid beneficiaries at the centers owned by the Kolades’. Methadone services are widely used as the most efficient and proven ways to help those addicted to opiates to obtain sobriety. Methadone clinics are also still a controversial topic, some seeing as it one drug replacing another.

The allegations accused New Era and the Center’s founders, Dr. Ebenezer Kolade and Dr. Christina Kolade, of violating the False Claims Act, which is defined as “knowingly”, with respect to information, acts in deliberate ignorance of the truth or falsity of the information, without regard to whether the person intends to defraud an agency. The investigation showed this conduct occurred from October 1, 2009 until November 30, 2013.

As part of their practice, New Era and the Kolades’ provide methadone maintenance services to Medicaid beneficiaries. Medicaid then pays providers a weekly “bundled rate” for methadone maintenance services. The bundled rate included, following state regulations, the intake evaluation of the patient; the initial physical examination; on-site drug abuse testing and monitoring; and individual, group, and family counselling services.

The government alleged that New Era and its founders provided methadone maintenance counseling services to its Medicaid patients, and submitted the claims for the bundle rate, but also submitted claims to Medicaid for psychotherapy services for the same patients. The psychotherapy services would fall under the bundle package that they had already been paid for, which constitutes as double billing.  Further allegations said that center did not actually provide the psychotherapy services, but only provided methadone maintenance counseling services. The United States and the State of Connecticut contend that the claims submitted for psychotherapy services constituted false claims submitted to the Medicaid program.

"For 16 years New Era Rehabilitation Center (NERC) has been a respected and valued member of the New Haven and Bridgeport communities, providing much-needed behavioral health and substance abuse treatment services," said Dr. Ebenezer Kolade, CEO and President of NERC. "NERC has fully cooperated with a recent government investigation into some of its past billing practices and, without admitting any wrongdoing, has reached an agreement in order to settle this matter. This settlement agreement is not an admission of liability – instead, NERC wishes to avoid the disruption of litigation and focus on addressing the state's devastating opioid crisis and helping patients recover."

Of the $1,378,533 in settlement funds, the state's share of $881,945 will be returned to Connecticut’s Medicaid Assistance Program.

“We must ensure that taxpayers’ health care dollars used for substance abuse treatment are properly spent,” said U.S. Attorney Durham. “Medical practices and physicians who treat patients for substance abuse must bill their services accurately and honestly. Health care providers who submit false claims to federal health care programs will be held accountable.”


People who suspect health care fraud are encouraged to report it by calling 1-800-HHS-TIPS or the Health Care Fraud Task Force at (203) 777-6311.