NJ regulation of addiction services is still inadequate

America’s deepening drug crisis created a desperate need for more services and new methods to help addicts recover. In New Jersey alone, more than 3,100 people died from drug overdoses last year, and another 2,237 so far this year. Another 75,000 people have been saved from overdosing on naloxone since 2017.

Businesses, new and existing, and nonprofits help addicts get back to sober living, and for the most part, do a good job. America’s addiction recovery industry is a $42 billion sector and growing.

However, where there is money to be made for good entrepreneurs, there are also bad actors and the need for official and criminal enforcement. We started raising awareness in 2018 and great progress has been made on these fronts. A recent hearing by the New Jersey State Commission of Inquiry showed that more needs to be done to protect people who are particularly vulnerable to drug addiction.

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“All too often, addicts and their families fall victim to the very system designed to help them recover and rebuild their lives,” commission chair Tiffany Williams Brewer said at last month’s public hearing in Trenton.

The SCI, which will publish a report on its findings in the coming months, gave several examples at the hearing that are emblematic of the problems facing the industry. It highlighted Mullica Hill businessman Nicholas DeSimone, who made $15 million within three years of opening his addiction counseling center.

Investigators with the SCI alleged illegal business practices at DeSimone centers such as double billing, billing for services not rendered, and falsifying urine tests to create the impression that patients had relapsed and would require longer stays, allowing for further billing.

Laura Mercandetti, a forensic accountant at SCI, said DeSimone and his wife Michelle evaded federal reporting requirements and diverted millions from their business — dubbed the Kingsway Recovery Center — to investments, credit card purchases, and cash purchases of cars and other homes.

Investigators have referred the DeSimones to law enforcement for possible prosecution for money laundering, healthcare fraud and income tax evasion, Mercandetti said.

One outpatient treatment center, the Sanctuary at Cherry Hill, took $6 million in insurance payments over 18 months, Mercandetti said. “They spent it on groceries, clothing, car payments, personal vacations and entertainment, other household expenses, and cash withdrawals from ATMs,” she said. Then the center closed when it couldn’t cover staff salaries or business expenses.

Some recreation facilities pay others to refer patients to them with generous private insurance coverage, an illegal practice known as “body referral.” Then-Rep. John Armato was a major sponsor of a law passed early last year that specifically criminalized patient referrals. Recovery Advocates of America, a nonprofit based in Hamilton, Mercer County, accepted more than $600,000 in such payments from 35 treatment centers, a special agent for the commission testified. Investigators said they were not aware of anyone charged under the law.

The tragic death of a former Miss New Jersey has highlighted how difficult it can be to get drug addicts the treatment they need under the current system.

Georgine DiMaria competed in the 2006 Miss America Pageant and subsequently served as the national spokesperson for the American Lung Association. Then, in 2009, she began campaigning for the legalization of medical marijuana, admitting she had used it during her tenure as Miss New Jersey. She later became addicted to prescription drugs and struggled with alcoholism.

Her sister, Nicole DiMaria, said Georgine left an inpatient treatment program in the middle of a planned month-long stay, partly because of confusion about insurance coverage and costs. Georgine died last year from an addiction-related liver disease and organ failure.

“I’m a healthcare attorney and I do research in this area for a living and I’ve found it so difficult to find information,” Nicole DiMaria testified. She called on the state to require providers and insurers to disclose costs so families can make informed decisions about care.

Many patients experience good outcomes from addiction treatment and help with recovery, while for others hope can be fleeting. Experience still determines the best practices to help individuals and the nation through this crisis.

Better oversight would help the development of the addiction healing industry. New Jersey needs targeted changes to its regulations and strong enforcement to prevent treatment facilities from abusing patients. This is just as important as supporting good institutions that help people in need.