Owner of Southern California sober living homes sentenced to 2 years for fraud

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5th District Supervisor Lisa Bartlett speaks about the “Rehab Riviera” in Orange County during a news conference with Orange County District Attorney Tony Rackauckas at the Orange County DA’s office in Santa Ana about a Sober Living-home Investigation and Prosecution Task Force (SLIP)case against 11 defendants including five doctors, two administrators and four body brokers charged with fraud for exploiting drug addicts to bill insurance for non-FDA approved drugs and dangerous surgeries Wednesday, Sept. 26, 2018. (Photo by Michael Fernandez, Contributing Photographer)

A Bakersfield attorney who Orange County prosecutors said built a $22 million empire by fraudulently billing insurance firms for urine tests that were either not needed or not completed has been sentenced to two years in jail.

Philip Ganong, 70, pleaded no contest Monday to 10 counts of submitting fraudulent claims for a health benefit at a chain of sober living homes his family operated in Southern California.

Ganong, his wife and their son collected urine samples from employees and patients staying at their homes. They created labs to test that urine. And they charged insurance companies, sometimes hundreds of dollars per sample, to analyze it. But often the tests were either not done or not needed, and the prescriptions were forged, prosecutors said at the time.

Ganong’s wife, Pamela, is awaiting a mental health competency hearing Nov. 28 to determine if she can stand trial on charges of submitting fraudulent claims for health benefit. Their son, William, died in a house fire in 2019.

A co-defendant, Susan Lee Stinson, pleaded guilty last week to two fraud charges and was sentenced to 34 days in jail.

The Ganong case highlighted the work of a special task force established by former District Attorney Tony Rackauckas. It was one of the team’s first cases in the aftermath of an investigation by Southern California News Group into abuses within the so-called “Rehab Riviera” in the Los Angeles basin.

The investigation found:

  • Drug counselors and others could run sober living homes and some types of treatment centers without passing any kind of criminal background check. Even people convicted of drug crimes were allowed, under state law, to get a license to own and/or operate drug and alcohol rehab centers.
  • Addicts and families considering rehab had no easy way to check the records of treatment centers, recovery homes or their owners.
  • The state lags behind others in adopting reforms to crack down on treatment center operators who exploit vulnerable addicts and focus more on profits than on effective care.

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