Behavioral Health Fraud Defense
Former DOJ Fraud Section Prosecutors. Nationwide Defense for Psychiatrists, Psychologists, Mental Health Clinic Owners, Counselors, Substance Abuse Treatment Providers, and Healthcare Executives Facing Federal Behavioral Health Fraud Investigations and Charges.
Based in Washington, D.C., Armstrong & Bradylyons PLLC defends psychiatrists, psychologists, licensed clinical social workers, licensed professional counselors, mental health clinic owners, substance abuse treatment providers, partial hospitalization program (PHP) operators, intensive outpatient program (IOP) operators, and healthcare executives in federal behavioral health fraud investigations and prosecutions nationwide.
The firm’s healthcare fraud defense practice is built on nearly a decade of combined experience at the Healthcare Fraud Unit of DOJ’s Fraud Section. Scott Armstrong, Drew Bradylyons, and Andrea Savdie tried 17 federal jury trials in healthcare fraud cases at DOJ’s Fraud Section involving over $2.8 billion in alleged false and fraudulent claims to federal healthcare programs. The firm uses that experience to defend individuals in behavioral health fraud cases at every stage: from the first grand jury subpoena, through federal indictment, and at trial.
Behavioral health fraud is one of the fastest-growing categories of federal healthcare fraud enforcement. DOJ’s 2025 Year in Review identified the Substance Abuse Treatment Initiative as a key enforcement priority. The 2025 National Health Care Fraud Takedown charged a Pakistani national with orchestrating a $650 million behavioral health fraud scheme through 41 addiction clinics in Arizona. Federal prosecutors, HHS-OIG, the FBI, and state Medicaid Fraud Control Units target every type of behavioral health provider: psychiatric practices, community mental health centers, substance abuse treatment facilities, sober homes, PHP and IOP programs, and telehealth mental health platforms.
Armstrong & Bradylyons PLLC defends every behavioral health fraud case from the start as if it will go to trial. That is not a slogan. It is the operating principle of the firm, grounded in 25 federal jury trials in complex fraud cases in federal courts across the country.
Trial experience drives results at every stage. Behavioral health fraud cases are built on claims data analytics, medical record audits, patient interviews, cooperating witness testimony, staffing and credentialing analysis, and financial tracing. They involve allegations of billing for services never rendered, upcoding therapy sessions, billing non-physician services at physician rates, operating PHPs and IOPs without clinical justification, paying kickbacks for patient referrals, and providing services so substandard that they lacked any therapeutic purpose. The firm builds the factual record from the first day of engagement: analyzing claims data, retaining psychiatric and clinical experts, identifying and preparing witnesses, and developing a case theory that can withstand the government’s scrutiny.
The firm’s attorneys know how federal prosecutors build healthcare fraud cases because they built them. Scott Armstrong served for nearly a decade at DOJ’s Fraud Section, where he served as lead trial counsel in 16 federal jury trials, including complex healthcare fraud cases involving Medicare, Medicaid, and Tricare. Drew Bradylyons served as Chief of EDVA’s Financial Crimes and Public Corruption Unit and, before that, supervised the Healthcare Fraud Unit’s Miami Strike Force at DOJ’s Fraud Section. That combined experience provides the firm with an unmatched understanding of how federal healthcare fraud cases are investigated, charged, and tried.
Behavioral health fraud enforcement is intensifying. DOJ, HHS-OIG, the FBI, and state Medicaid Fraud Control Units are targeting behavioral health providers with sustained criminal and civil enforcement. The enforcement covers every service type: psychiatric services, psychotherapy, substance abuse treatment, partial hospitalization programs, intensive outpatient programs, community-based behavioral health services, and telehealth mental health platforms.
DOJ’s Fraud Section identified the Substance Abuse Treatment Initiative as a key enforcement priority in its 2025 Year in Review. The initiative targets treatment centers that bill federal and state healthcare programs for nonexistent or misrepresented services, use illegal kickbacks to recruit patients, and divert public funds intended to support genuine recovery.
The 2025 National Health Care Fraud Takedown was the largest in history. DOJ charged 324 defendants in schemes involving over $14.6 billion in intended losses. A central case involved a Pakistani national charged with orchestrating a $650 million behavioral health fraud scheme through at least 41 addiction clinics in Arizona. The defendant allegedly credentialed and enrolled clinics that did not provide legitimate care, then billed Arizona’s Medicaid system for substance abuse treatment therapy services that were never provided, not provided as billed, not provided by qualified personnel, or so substandard that they lacked any treatment purpose. The clinics recruited patients from homeless shelters, encampments, and Native American reservations. Sober home owners received kickbacks for referrals.
Enforcement extends well beyond substance abuse. In March 2025, federal prosecutors charged a Minnesota couple with orchestrating a $15 million healthcare fraud scheme involving neurofeedback and other behavioral health services billed through a network of clinics. In June 2025, eight individuals in Charlotte were charged with conspiring to defraud South Carolina’s Medicaid program of more than $21 million by submitting false claims for behavioral health services that were never provided. The defendants bought and sold the personal identifying information of Medicaid beneficiaries who never knew claims were submitted in their names. In December 2025, federal charges targeted principals of Housing Stabilization Services and Early Intensive Developmental and Behavioral Intervention (EIDBI) programs in Minnesota for billing Medicaid for services that were never delivered.
Sentences in behavioral health fraud cases are among the most severe in healthcare fraud. A Houston defendant received 45 years for a $158 million partial hospitalization program fraud. A South Florida defendant received 25 years for a PHP scheme. A Massachusetts psychiatrist was convicted for fraudulently billing Medicare and private insurers more than $11 million for treatments never rendered. These outcomes reflect DOJ’s view that behavioral health fraud exploits vulnerable patients, including those struggling with addiction, mental illness, and homelessness.
The firm’s behavioral health fraud defense practice is built on healthcare fraud trial experience, deep knowledge of Medicare and Medicaid behavioral health billing rules, and years of experience investigating and prosecuting complex healthcare fraud cases at DOJ’s Fraud Section. These tools are deployed at every phase of a case.
Establishing Clinical Justification for Behavioral Health Services
The government alleges that behavioral health services were medically unnecessary when they were not clinically indicated, when the patient did not meet admission criteria for PHP or IOP, or when the services provided had no therapeutic purpose. The firm retains independent psychiatrists, psychologists, and clinical experts to evaluate whether services met applicable clinical standards, whether PHP and IOP admissions were supported by the patient’s condition, and whether treatment plans reflected individualized clinical assessment. Medical necessity is a clinical judgment. The government’s medical necessity opinion must be tested through cross-examination at trial.
Challenging the Government’s Claims Data and Medical Record Analysis
Federal prosecutors build behavioral health fraud cases on CPT billing analysis, medical record audits, and documentation review. The government identifies providers who bill disproportionately high volumes of therapy sessions, who upcoded session length or complexity, who billed non-physician services at physician rates, or whose documentation does not support the services billed. The firm retains billing and coding experts to challenge the government’s methodology, demonstrate that coding practices were consistent with applicable CMS guidelines, and establish that documentation supported the services rendered.
Analyzing Patient Referral Relationships and Compensation Structures
The government alleges that behavioral health providers paid kickbacks to sober home operators, patient recruiters, marketers, and referral sources for patient referrals. Prosecutors target referral fees, per-patient payments, and below-market housing provided to patients in exchange for attending treatment programs. The firm analyzes every financial relationship against the Anti-Kickback Statute and applicable safe harbor regulations. Where the government alleges that sober home payments constituted kickbacks, the firm demonstrates the legitimacy of housing arrangements and the separation between housing and treatment referrals.
Attacking the Government’s Proof of Knowledge and Willful Conduct
Federal healthcare fraud and Anti-Kickback Statute violations require proof of knowing and willful conduct. Good faith matters. The firm presents evidence of compliance programs, reliance on legal counsel, legitimate clinical judgment, staffing and credentialing protocols, and the clinical basis for treatment decisions. Where the government relies on cooperating witness testimony from former employees, patients, or co-conspirators, the firm attacks the reliability, credibility, and motivations of those witnesses. The firm’s attorneys have extensive experience cross-examining cooperating witnesses in federal healthcare fraud trials.
Federal behavioral health fraud investigations target individuals at every level of the operation: from the clinicians who deliver services, to the clinic owners who direct billing, the administrators who manage documentation, and the referral sources who steer patients. Armstrong & Bradylyons PLLC defends these individuals in federal investigations, after indictment, and at trial.
Defense of Psychiatrists and Psychologists
The firm defends psychiatrists, psychologists, and psychiatric nurse practitioners in federal healthcare fraud investigations and prosecutions. Psychiatrists face criminal exposure when the government alleges they billed for services not rendered, upcoded therapy sessions, signed off on treatment plans without patient contact, prescribed controlled substances without legitimate clinical evaluation, or allowed non-physician staff to bill under their provider numbers. The firm defends psychiatrists by retaining clinical experts to establish that services were rendered, that billing reflected the services provided, and that clinical judgment supported treatment decisions.
Defense of Mental Health Clinic Owners and Operators
The firm defends owners and operators of psychiatric practices, community mental health centers, substance abuse treatment facilities, PHP and IOP programs, counseling agencies, and telehealth mental health platforms. Clinic owners are primary enforcement targets. Prosecutors pursue owners who allegedly directed billing for services never provided, designed compensation structures to pay kickbacks for patient referrals, employed unqualified or unlicensed staff to render services billed to federal programs, or operated facilities that did not provide legitimate care. The firm defends clinic owners by challenging the government’s evidence of personal knowledge, direction, and intent.
Defense of Licensed Counselors and Therapists
The firm defends licensed clinical social workers (LCSWs), licensed professional counselors (LPCs), licensed clinical addiction specialists, marriage and family therapists, and other licensed behavioral health professionals in federal fraud cases. Licensed clinicians face exposure when the government alleges they participated in phantom billing, falsified therapy notes, provided services under another provider’s credentials, or rendered services without the qualifications required by state licensing laws and Medicaid regulations. The firm defends clinicians by demonstrating that services were actually provided and that documentation reflected the care delivered.
Defense of PHP and IOP Program Operators
The firm defends operators of partial hospitalization programs (PHPs) and intensive outpatient programs (IOPs) in federal fraud investigations and prosecutions. PHP and IOP fraud is a longstanding enforcement priority. The government targets programs that admitted patients who did not meet clinical criteria, billed for services never provided, provided services so substandard they lacked therapeutic purpose, and used kickback arrangements to recruit and retain patients. PHP services are billed daily, and every medically unnecessary day generates a separate false claim. The firm defends PHP and IOP operators by retaining clinical experts to demonstrate that admissions met applicable criteria and that programming reflected genuine therapeutic services.
Defense of Substance Abuse Treatment Providers
The firm defends substance abuse treatment centers, addiction counselors, and sober home operators in federal fraud investigations. DOJ’s Substance Abuse Treatment Initiative specifically targets facilities that bill for nonexistent or misrepresented services, use kickbacks to recruit patients, and divert public funds intended for recovery. The Arizona $650 million case demonstrates the scale of enforcement in this sector. The firm defends treatment providers by demonstrating that services were rendered, that treatment met clinical standards, and that referral arrangements complied with the Anti-Kickback Statute and EKRA.
Defense of Billing Staff, Administrators, and Patient Recruiters
The firm defends billing managers, office administrators, patient recruiters, and staff charged in behavioral health fraud cases. These individuals face conspiracy charges and healthcare fraud charges when the government alleges they created fictitious therapy notes, submitted false claims, purchased or sold beneficiary identifying information, recruited patients through kickback arrangements, or provided NPI numbers to facilitate fraudulent billing. The firm defends these individuals by challenging the government’s evidence of knowledge, willful participation, and the scope of the alleged conspiracy.
Federal behavioral health fraud investigations follow a pattern. Understanding that pattern is the first step to defending against it. Scott Armstrong and Drew Bradylyons built these types of cases as senior prosecutors at DOJ’s Fraud Section. They know how federal investigators identify targets, develop evidence, and present cases to grand juries.
Claims Data Analytics and Billing Pattern Analysis
The investigation starts with data. HHS-OIG, CMS, and the FBI analyze Medicare and Medicaid claims data to identify behavioral health providers with anomalous billing patterns. The government flags providers who bill disproportionately high volumes of therapy sessions, whose PHP or IOP census is inconsistent with the facility’s capacity or staffing, who bill for services on dates when the rendering provider was unavailable, or whose billing surges at specific times of year. The Health Care Fraud Data Fusion Center deploys advanced analytics to detect these patterns in real time.
Medical Record Audits
Federal investigators audit medical records to compare documentation against claims. They examine whether therapy notes support the services billed, whether the documented session length matches the CPT code billed, whether treatment plans reflect individualized clinical assessment, whether progress notes demonstrate therapeutic progress, and whether the credentials of the rendering provider match the credentials billed. Discrepancies between claims and documentation are treated as evidence of fraud.
Patient Interviews and Cooperating Witnesses
Federal agents interview current and former patients to determine whether services were actually provided, whether services matched what was billed, and whether patients were recruited through kickback arrangements. Agents interview former employees, therapists, and administrators to identify phantom billing, documentation falsification, and kickback payments. Cooperating witnesses from inside the organization are the backbone of many behavioral health fraud cases. The firm cross-examines cooperating witnesses on their criminal exposure, plea agreements, and motivations for cooperating.
Staffing and Credentialing Analysis
The government examines whether the provider had sufficient qualified staff to render the volume of services billed. Investigators compare staffing records, payroll data, and credentialing files against claims volume. They identify instances where services were billed under a licensed provider’s NPI number but were allegedly rendered by unlicensed or unqualified staff, or where services were billed on dates when the listed provider was not present at the facility.
Sober Home and Referral Chain Analysis
In substance abuse treatment cases, investigators trace the referral pathway between sober homes, patient recruiters, and treatment facilities. They analyze payments from treatment facilities to sober home operators, per-patient referral fees, below-market housing arrangements, and transportation payments. The government treats any payment that correlates with patient referrals as strong evidence of an Anti-Kickback Statute violation.
Qui Tam Whistleblower Complaints
Qui tam whistleblower complaints under the False Claims Act are a significant source of behavioral health fraud investigations. Former employees, therapists, billing staff, and competitors file qui tam actions alleging phantom billing, upcoding, kickback arrangements, and services rendered by unqualified personnel. Whistleblowers receive a percentage of any recovery, which creates strong incentives to report. Many behavioral health fraud investigations begin with a sealed qui tam complaint that the government investigates before deciding whether to intervene.
Search Warrants and Electronic Evidence
Federal agents execute search warrants for patient records, financial records, electronic health records, cell phones, and computers. They obtain cloud warrants under 18 U.S.C. § 2703 for email accounts, text messages, and cloud-based EHR systems. Communications between clinic owners, billing staff, therapists, and referral sources are analyzed for evidence of phantom billing, documentation falsification, and kickback arrangements.
Federal behavioral health fraud prosecutions draw on several criminal statutes. Behavioral health cases frequently involve both traditional healthcare fraud statutes and the Anti-Kickback Statute, reflecting the prevalence of kickback arrangements in patient referral networks. The government charges aggressively and stacks counts.
Healthcare Fraud (18 U.S.C. § 1347)
The primary charging statute. Healthcare fraud targets billing for behavioral health services not rendered, upcoding therapy sessions, billing non-physician services at physician rates, billing for PHP and IOP services for patients who did not meet admission criteria, and submitting claims supported by falsified documentation. The penalty is up to 10 years per count. If the fraud results in serious bodily injury, the maximum increases to 20 years.
Anti-Kickback Statute (42 U.S.C. § 1320a-7b)
The Anti-Kickback Statute is charged in behavioral health fraud cases involving payments for patient referrals. The government targets kickbacks to sober home operators, patient recruiters, community health workers, and referral networks. Violations carry up to 10 years per violation. In substance abuse treatment fraud cases, kickback charges are frequently combined with healthcare fraud and money laundering charges.
Eliminating Kickbacks in Recovery Act (18 U.S.C. § 220)
EKRA applies to kickback payments for referrals to clinical treatment facilities, including substance abuse treatment centers, behavioral health clinics, and laboratories. EKRA covers all payors, including private insurance. Its safe harbors are narrower than the AKS. EKRA is increasingly charged alongside the AKS in behavioral health fraud cases involving substance abuse treatment referrals.
Wire Fraud (18 U.S.C. § 1343)
Wire fraud applies to any scheme to defraud that uses interstate wire communications. Wire fraud carries up to 20 years per count. In behavioral health fraud cases, wire fraud captures the electronic submission of claims, electronic transmission of patient records and referral information, and interstate communications in furtherance of the fraud scheme.
Money Laundering (18 U.S.C. §§ 1956, 1957)
Money laundering charges are common in large behavioral health fraud prosecutions. The government charges money laundering when it alleges that defendants conducted financial transactions involving fraud proceeds with the intent to conceal or promote the underlying scheme. Money laundering carries up to 20 years per count.
False Claims Act (31 U.S.C. §§ 3729–3733)
The False Claims Act is the government’s primary civil enforcement tool against behavioral health providers. FCA settlements and judgments in healthcare fraud exceeded $6.8 billion in FY 2025, the highest annual total in history. Qui tam whistleblower complaints drive a significant share of behavioral health FCA cases. Many investigations run parallel criminal and civil tracks.
Federal Program Exclusion and Collateral Consequences
Beyond incarceration and fines, a conviction or settlement in a behavioral health fraud case triggers mandatory exclusion from Medicare, Medicaid, and all federal healthcare programs under the authority of HHS-OIG. For behavioral health providers, exclusion means the practice can no longer bill any federal or state healthcare program. For licensed clinicians, exclusion effectively ends a career. State licensing boards initiate separate disciplinary proceedings based on the underlying conduct.
What Types of Behavioral Health Fraud Does the Government Prosecute?
Federal prosecutors target several categories of behavioral health fraud. The most common are billing for therapy sessions or treatment services never rendered (phantom billing), upcoding the length or complexity of therapy sessions, billing non-physician services at physician rates, operating PHPs and IOPs for patients who do not meet clinical admission criteria, paying kickbacks to sober home operators and patient recruiters for referrals, employing unqualified or unlicensed staff to render services billed to federal programs, and falsifying therapy notes and treatment documentation.
DOJ’s Fraud Section identified the Substance Abuse Treatment Initiative as a key enforcement priority in 2025, targeting treatment centers that bill for nonexistent or misrepresented services and use illegal kickbacks to recruit patients.
What Is PHP Fraud and Why Does It Generate Extreme Sentencing Exposure?
Partial hospitalization program (PHP) fraud involves billing Medicare or Medicaid for PHP services provided to patients who do not meet clinical criteria for PHP admission, or billing for PHP services that were never provided or were so substandard they lacked therapeutic purpose. PHP fraud generates extreme sentencing exposure because PHP services are billed daily. Every medically unnecessary day of PHP treatment generates a separate false claim.
The daily billing structure means that a PHP operating for months with improperly admitted patients generates hundreds or thousands of individual false claims. A Houston defendant received 45 years in federal prison for a $158 million PHP scheme. The daily billing multiplier is what makes PHP fraud cases among the highest-loss cases in healthcare fraud enforcement.
What Are the Penalties for a Federal Behavioral Health Fraud Conviction?
The penalties are severe. Healthcare fraud carries up to 10 years per count, or 20 years if serious bodily injury results. Wire fraud carries up to 20 years per count. Money laundering carries up to 20 years per count. Anti-Kickback Statute violations carry up to 10 years per violation. EKRA violations carry up to 10 years and $200,000 per violation.
Beyond prison, defendants face restitution, forfeiture of assets purchased with fraud proceeds, and mandatory exclusion from federal healthcare programs. State licensing boards initiate separate disciplinary proceedings. For behavioral health professionals, these collateral consequences permanently end a career.
What Defenses Are Available in a Federal Behavioral Health Fraud Case?
The available defenses depend on the specific allegations. Common defenses include the following:
Medical necessity. Retaining independent psychiatric and clinical experts to demonstrate that PHP, IOP, and therapy services were clinically appropriate.
Billing accuracy. Retaining coding experts to demonstrate that CPT codes reflected the services rendered and complied with CMS guidelines.
Staffing and credentialing compliance. Demonstrating that providers who rendered services held appropriate credentials and licensure.
Good faith reliance. Presenting evidence of compliance programs, reliance on legal counsel, and legitimate clinical judgment.
Cross-examining cooperators. Attacking the credibility of cooperating witnesses with plea agreements and sentencing incentives.
Scott Armstrong and Drew Bradylyons leverage their significant federal trial experience to anticipate the government’s trial strategy and develop an aggressive, evidence-based defense.
What Triggers a Federal Behavioral Health Fraud Investigation?
Federal behavioral health fraud investigations are typically triggered by CMS claims data analytics identifying billing outliers, HHS-OIG audits of behavioral health billing, qui tam whistleblower complaints filed by former employees or therapists under the False Claims Act, referrals from state Medicaid Fraud Control Units, patient complaints, and proactive referrals from the Health Care Fraud Data Fusion Center.
Common red flags include unusually high therapy session volumes relative to staffing, PHP or IOP billing inconsistent with facility capacity, billing on dates when the rendering provider was unavailable, rapid billing growth, and financial relationships between the treatment facility and referral sources that suggest kickback arrangements.
Can a Clinic Owner Be Charged Even If Licensed Therapists Rendered the Services?
Yes. The fact that a licensed clinician rendered some services does not insulate the clinic owner from criminal liability. Federal prosecutors use theories of conspiracy and aiding and abetting to charge clinic owners who directed the billing scheme, designed compensation structures to pay kickbacks for referrals, caused the submission of false claims, or employed unqualified staff. If the clinic owner designed the billing and referral structure, both the owner and participating clinicians face federal charges.
How Does Behavioral Health Fraud Enforcement Intersect with Sober Home Fraud?
Behavioral health fraud and sober home fraud are deeply connected. Federal prosecutors allege that substance abuse treatment centers pay kickbacks to sober home operators in exchange for patient referrals. Sober homes house patients and steer them to affiliated treatment programs. The treatment facilities then bill Medicare, Medicaid, or private insurance for services provided to those patients. The government treats any payment from a treatment facility to a sober home operator that correlates with patient referrals as an Anti-Kickback Statute and EKRA violation.
The Arizona $650 million case in the 2025 Takedown involved kickbacks paid to sober home owners to recruit patients from homeless shelters and Native American reservations for treatment services that were never provided or were medically unnecessary.
Does Upcoding Therapy Sessions Create Federal Criminal Exposure?
Yes. Upcoding occurs when a provider bills for a higher-level service than was actually rendered. In behavioral health, this commonly involves billing for a 60-minute therapy session (CPT 90837) when the actual session lasted 30 minutes or less (CPT 90832), billing for psychotherapy with evaluation and management services when only one component was performed, or billing individual therapy when the service was group therapy. Each upcoded claim is a separate false claim.
The government identifies upcoding through claims data analysis showing disproportionately high volumes of higher-reimbursement codes, medical record audits comparing documented session length against billed codes, and patient and staff interviews. An experienced healthcare fraud defense attorney challenges the government’s coding analysis and demonstrates that billing reflected the services rendered.
Is Telehealth Behavioral Health Fraud Being Prosecuted?
Yes. Telehealth behavioral health fraud is a growing enforcement area. An HHS-OIG report found that despite high risks for fraud, waste, and abuse, many states lack specific monitoring and oversight for telehealth in the behavioral health sector. The government targets telehealth behavioral health providers who bill for services not rendered, who use telehealth platforms to generate prescriptions for controlled substances without legitimate clinical evaluation, or who use telehealth to scale phantom billing across state lines.
The Done Global prosecution in November 2025 established that DOJ will pursue telehealth platforms that facilitate illegal prescribing and billing at scale. Behavioral health telehealth providers face the same scrutiny as in-person providers, with the added risk that telehealth makes it easier for the government to prove services were not rendered as billed.
Does Armstrong & Bradylyons Handle Behavioral Health Fraud Cases Nationwide?
Yes. Armstrong & Bradylyons PLLC defends individuals in federal behavioral health fraud investigations and prosecutions in every federal district court in the country. The firm can practice in every federal district.
Behavioral health fraud enforcement is active nationwide, with significant cases in Arizona, South Florida, Texas, the Carolinas, Minnesota, Massachusetts, the District of Columbia, and across the Northeast. DOJ’s Fraud Section operates nine Strike Forces across 27 federal districts, and the newly established New England Strike Force signals expanded enforcement in that region.
Scott Armstrong and Drew Bradylyons have tried healthcare fraud cases and handled investigations in federal courts throughout the country during their combined 25-year DOJ career. The firm is based in Washington, D.C. and represents clients in every jurisdiction where DOJ, HHS-OIG, and state MFCUs investigate and prosecute behavioral health fraud cases.