It didn’t take long for Lillian Imbert to conclude that her outpatient drug treatment program wasn’t helping her recovery. Fellow patients appeared to nod out in group therapy sessions that she found repetitive and shallow. They begged her to sell them her clean urine to fool the clinic’s weekly drug tests. The clinic itself was dingy and run down, and her counselors seemed harried trying to juggle heavy caseloads. Interactions with them were perfunctory. Outside the clinic, she said, a man she believed to be a patient openly sold drugs to those arriving for counseling.

Imbert said she desperately wanted to transfer to a program that took recovery more seriously. But she couldn’t. With rental assistance from the city of New York, she was living in a “sober home” — a place where indigent alcoholics and addicts typically reside four to a room while they undergo treatment. Imbert said her landlord set the rule: Either she went to a specific clinic, New York Service Network (NYSN) in Brooklyn, or he’d evict her. Seeing no other option, Imbert complied.

“I felt trapped,” Imbert said. “Most of the counselors were just going through the motions.”

A ProPublica examination of NYSN and the taxpayer-financed system that sustains it shows that Imbert’s experience isn’t unique. In New York, a lack of affordable housing gives sober-home landlords extraordinary power over their residents, who often are forced to attend specific outpatient treatment programs that can be of dubious quality. It’s a system that victimizes not only alcoholics and addicts — making an already challenging recovery more difficult — but taxpayers who pick up the tab.

Outpatient addiction treatment for the poor has become a mainstay of the social safety net, costing the federal, state and local governments $6.7 billion in 2009, the most recent figure available. The money pays for an estimated 1.5 million admissions a year, nearly three-fourths of them to outpatient programs like NYSN’s, according to a study by the National Center on Addiction and Substance Abuse at Columbia University.

As Medicaid coverage expands under the new health reform law, millions more people are expected to become eligible for treatment. They’ll be entering a system that many experts say is loosely regulated, rife with unskilled providers and open to fraud and abuse. As the Columbia study notes, the success rate is low: Of those who enter outpatient care, only two in five complete treatment.

In Massachusetts, authorities have won convictions against sober-home employees who were sending residents to get drug tests at a company that paid kickbacks to the homes. In South Florida, a federal task force last year prosecuted halfway house operators who accepted illicit payments for sending patients to clinics for unneeded procedures. And in July, California halted payments to 16 centers amid reports by CNN and the Center for Investigative Reporting about phony billing.

Oversight of outpatient centers is mainly left to states, which typically perform inspections and paperwork audits but don’t necessarily delve deeply into clinic operations. Patient outcomes are self-reported by clinics, and counselors often lack medical training and are poorly paid. Clinics generally are compensated on a fee-for-service basis, creating an incentive to bill for as many visits as possible.

Some clinics “are just preying on people’s desperation,” said Susan Foster, director of policy research at the Columbia center. Foster served as the principal investigator for the center’s 2012 report on the state of U.S. addiction treatment, which found “widespread system failure in health care service delivery, financing, professional education and quality assurance.”

The case of Imbert, supported by her medical records and interviews with other patients and current and former clinic employees, provides a rare look at the inner workings of New York’s indigent drug and alcohol treatment system and the close relationships between sober homes and clinics.

When it comes to New York Service Network, former employees have filed complaints with regulators alleging falsification of records, padding of counseling sessions or payment of kickbacks to secure a steady stream of patients. Their claims track with some of Imbert’s experiences as a patient over five months, and with records in her patient file describing counseling sessions that she said never occurred.

Lazar Feygin, the doctor who owns NYSN, adamantly denied paying kickbacks in exchange for patient referrals. He also disputed allegations by Imbert and former employees, who said counseling records were sometimes fabricated so NYSN could justify its billings to the state. “My reputation is crystal clear,” Feygin said in an interview with ProPublica. “Why am I in this business? Because I like it,” he said. “I want to help people. I want to treat people as much as I can.”

NYSN, housed in an unassuming brick building along a quiet street of single-family homes, is one of about 500 outpatient programs in the state. New York Medicaid paid claims totaling nearly $437 million for outpatient drug treatment services last year.

NYSN's relationship with sober-home operators, which have provided nearly all its clients, helped it become the seventh-busiest, non-methadone-dispensing outpatient drug treatment clinic in New York City in 2011, state records show. The clinic saw nearly 1,000 patients that year. In 2012, it billed Medicaid for $3.2 million.

Clinics are licensed by the state Office of Alcohol and Substance Abuse Services (OASAS) and are inspected at regular intervals depending in part on the length of their license. The city sends monthly $215 rent stipends for indigent addicts directly to the sober homes, which are not licensed. Allegations of kickbacks paid by treatment clinics to the sober homes that feed them are common among patients, counselors and others inside the system. But they have seldom resulted in action by authorities.

No sober-home operator referred more patients to NYSN than Imbert’s landlord, Yury Baumblit. In a class-action lawsuit, advocates for tenants have called conditions in Baumblit’s homes unsafe and accused him of illegally evicting residents, allegations he denied in court filings. The 62-year-old Baumblit, who has operated sober homes under various business names, was convicted in 2009 on unrelated felony charges of bilking medical insurers for claims from fake car accidents. He declined several interview requests and did not respond to written questions sent to his attorney.

The attorney general’s office has received at least two complaints about NYSN and its relationship with sober homes. In 2010, NYSN’s program manager told an OASAS investigator the clinic had a “contract/agreement” with sober homes. The investigator determined the arrangement was improper, and the findings are under investigation by the attorney general, according to a spokeswoman for OASAS. A former NYSN staffer’s complaint alleging kickbacks involving Baumblit and NYSN also has been referred to the attorney general. In addition, three sources close to NYSN have told ProPublica they were part of or were present at conversations in which NYSN owner Feygin discussed payments to sober-home operators who sent patients to the clinic.

Also in 2010, an audit by New York’s Office of Medicaid Inspector General uncovered serious recordkeeping irregularities at NYSN. State officials ordered the clinic to give back $2.5 million in Medicaid “overpayments” — nearly half the clinic’s claims from 2003 to 2007. The money is being repaid over time by withholding part of NYSN’s billings.

The attorney general’s office declined to confirm whether NYSN is under investigation. As of early August, the clinic still owed approximately $1.1 million to New York’s Medicaid program. In March, it earned a new two-year license despite numerous deficiencies, including missing information in patient records and the lack of a written quality improvement plan. NYSN agreed to a “corrective action plan,” a routine remedial step.

Advocates for tougher oversight say there is a natural tendency by regulators to give clinics a break. Demand for drug and alcohol treatment far exceeds available resources, studies show, and some treatment is better than none at all. Patients at clinics like NYSN often have multiple health and psychological problems on top of their drug dependencies, factors that can complicate recovery.

Keeping services flowing to people in need can become more important than aggressively combating fraud, said James Sheehan, who formerly ran the Medicaid inspector general’s office. Clinics can be hard to prosecute, Sheehan noted, in part because people with substance issues can make unreliable witnesses. Providers often have the political clout with lawmakers to block tougher oversight, he said.

“Where is the constituency for making sure we pay only for the stuff we get?” Sheehan said. “It’s only a couple of legislators who don’t have clinics in their districts.”

Descent Into Addiction

Long before Imbert ended up at NYSN’s door, she led an affluent life. Her father, a wealthy businessman, sent her to a fancy prep school. She had a successful career in high-end sales and married into wealth. While living in France, Imbert admitted to a drinking problem. At her family’s urging, she entered rehab, where she learned how to function without alcohol. Imbert said she remained sober for just shy of 18 years.

It was a riding accident that proved her undoing. Imbert was living in Greenwich, Conn., when a horse she was on crossed its legs and fell on top of her, crushing the left side of her body and cracking her skull. The accident left her with a broken collarbone, displaced hip and significant nerve damage. With slurred speech and vision problems, Imbert said she was unable to work and was largely bedridden for three years.

A doctor prescribed a cocktail of narcotics to tame searing pain from trigeminal neuralgia, a disorder affecting facial nerves sometimes called the “suicide disease” because it can be so debilitating. As medical bills mounted, her marriage dissolved under the strain. On June 22, 2012, Imbert said, she began to drink again. Her Manhattan landlord eventually moved to evict her, and relatives gave her an ultimatum: Prove she was serious about long-term sobriety, or they’d have nothing to do with her.

Addiction Treatment by the Numbers $24 billion Spent nationally on substance abuse treatment (2009) 69 percent Amount of the total that’s publicly funded $6.7 billion Public spending on outpatient treatment (2009) 1.5 million Admissions, publicly financed treatment (2009) 74 percent Share of admissions going to outpatient treatment (2008) 39 percent Completion rate for outpatient programs (2008) 44 percent Share of admissions from justice system (2008) 4.8 million Number who could qualify for addiction coverage under health care reform Sources: “Addiction Medicine: Closing the Gap between Science and Practice,” June 2012 and National Expenditures for Mental Health Services and Substance Abuse Treatment, 1986-2009

Imbert checked herself into a New York hospital to begin detoxing from the alcohol and painkillers. The hospital kept her for only four and a half days, and Medicaid wouldn’t pay for a residential treatment program. She was nowhere near completing detoxification from more than six years of prescription drugs, including the potent opiates Dilaudid and fentanyl. Nevertheless, she was discharged to a public shelter. There she drifted in and out of consciousness as the painkillers drained from her system, leaving her damaged nerves in agony.

Imbert said she was “so spaced out, I didn’t know who I was.” She fainted, hit her head and awoke shoeless in an ambulance rushing to the hospital.

This time she persuaded the hospital to hold her for six days. The hospital social worker referred her to an outpatient program in Manhattan and discharged her to a sober home in Brooklyn. The home informed Imbert she had to attend NYSN as a condition of residency, she said. Extreme vertigo, lethargy and elevated blood pressure drove Imbert back to the hospital. When she got out, however, the sober home no longer had a bed for her. Imbert didn’t want to return to the shelter. She ended up in a different sober home for women, this one run by Baumblit.

Nothing in Imbert's background had prepared her for what was to come. The house, in a rough section of Brooklyn called East New York, was part of a row of buildings that together can hold as many as 100 addicts, mostly men. It’s a 90-minute subway commute to NYSN, in the Mapleton neighborhood, but that is where she said Baumblit required her to attend treatment. Court filings and interviews with other patients echo her experience: Five other tenants, in affidavits and testimony for the class-action case, said they also had been required to attend NYSN.

Imbert said she feared for her life at Baumblit’s house. Drug and alcohol use was common. One of her housemates was selling sex for prescription drugs, something a former Baumblit employee told ProPublica was not uncommon. In the year that ended June 14, police were called to Baumblit’s row of homes on New Lots Avenue more than 100 times in response to medical emergencies, disputes and reports of robberies and drug crimes, according to an NYPD spokesperson.

Baumblit insisted that residents sign a contract, called the “House Rules,” agreeing to attend outpatient treatment. When Imbert started at NYSN, she was required to attend five counseling sessions a week — four group sessions and one individual. Five counseling sessions was the standard weekly schedule for almost all new patients, according to former NYSN staffers and patients, although clinic owner Feygin said all counseling schedules are tailored to individuals.

With straw-colored hair and striking blue eyes, Imbert stood out in NYSN’s overwhelmingly male and minority patient population. Her determination to keep her sobriety also set her apart.

Active substance abuse by fellow patients didn’t surprise her because it was so routine. Prices for illegal narcotics were discussed in the waiting room. The going price for clean urine was $20. Despite a need for money, Imbert never succumbed to the temptation to sell, she said. Neighbors of the clinic also told ProPublica they have been accosted for clean urine and witnessed drug dealing outside the clinic.

In the interview, Feygin said he can control only what happens on his own property. The Russian-born doctor, whose unwrinkled face belies his 66 years, acknowledged that clients are frequently ill-mannered and might offend neighbors, many of whom are Orthodox Jews and Muslims. Feygin provides a security guard and “no loitering” signs to help maintain order. He said any neighborhood drug dealing and urine sales are unrelated to his clinic.

Toward the end of her time at NYSN, Imbert realized that one of her group counselors was becoming increasingly incoherent and unable to focus during sessions. Former staffers said the counselor relapsed and is no longer with the program. Feygin said that, as far as he knows, the counselor left because of an illness.

“I was really shocked,” Imbert said. “Here was someone who was treating addicts, and he was using himself.”

‘Cut and Paste’ Recordkeeping

State regulations require comprehensive evaluations of new patients entering outpatient treatment. The evaluation includes personal histories that cover medical issues, family life and education. Those kinds of details are present in Imbert’s evaluation. They just don’t always correspond to her life history.

Imbert graduated high school from Culver Academies in Indiana. Her evaluation lists “coulver acadamey boarding school” but then reports that she "dropped out of high school" and received her “G.E.D.” while in “job corps” before she started “running the streets.” The evaluation also claims she wants “to go back to answering phones for work in the near future” — a job Imbert said she has never had.

The evaluation accurately lists her parents as deceased. Yet further down on the form, in answer to the question, "Who do you go to when you need to talk things through?" it states: “the client reported, i call my mother because i can talk with her about anything.” Glancing through her patient file after requesting it from NYSN, Imbert pointed out the discrepancy to a staffer, who fixed it. Imbert kept a copy of the original and provided it to ProPublica.

What the misinformation illustrates was a common practice at NYSN, according to Maxine Mathis, a counselor who left the facility last year. The staff called it “cut and paste.” Rather than go to the trouble of thoroughly interviewing a patient — as specified by the regulations — and noting the details on the evaluation forms, counselors would simply copy material from the forms of previous patients to save time, Mathis said.

New York Service Network in the Mapleton neighborhood in Brooklyn, N.Y., became the seventh-busiest, non-methadone-dispensing outpatient drug treatment clinic in New York City in 2011, state records show. (Melanie Burford for ProPublica)

Despite the 2010 inspector general’s audit, recordkeeping irregularities continued at NYSN, according to former staffers, patients and Imbert’s patient file. Another common practice involved something staffers call “ghosting.” In ghosting, counselors claimed that individual treatment sessions were longer than they actually were or simply fabricated them, according to Mathis and two other former NYSN staffers. The documentation is required to back up Medicaid billing.

Former staffers said Feygin repeatedly pressured counselors to “increase his numbers,” which they understood to mean see more patients for longer treatment sessions. “He would come into staff meetings and say, ‘I don’t like where my numbers are, you need to see more’” patients, said Theodore Raffudeen II, a former medical biller at the clinic who filed the complaint alleging kickbacks.

Imbert said her schedule called for one individual counseling session a week, as a counselor-signed treatment plan from February 2013 shows. With the exception of two meetings to discuss reducing her counseling load, the weekly one-on-one sessions never lasted more than 10 to 15 minutes, she said.

Yet Imbert’s NYSN records report more than 16 individual sessions of 45 minutes and two of 35 minutes between Dec. 10 and Feb. 25, sometimes two or three a week. Her file shows three 45-minute sessions in the last week of February. For 45-minute sessions, Medicaid pays about $126, its maximum fee for individual counseling, in the New York City area. The state pays lesser amounts for sessions shorter than 38 minutes.

The counselor’s notes for Imbert’s individual sessions contain boilerplate comments that could apply to any patient. When they are specific — for example, “client has had no headaches in a long time” or that she had a brain injury as a result “of falling on a bed of ice” — they are often wrong.

Shown records of Imbert’s individual counseling sessions from the last week of February, Feygin confirmed that the clinic had billed for them. He insisted the records were accurate, despite Imbert’s assertion that she never attended more than one such session a week. “I don't care what she says,” Feygin said. “I have a document here.”

Feygin strongly denied that he would encourage fraud or falsifying records. He said he encourages his staff to be productive and blamed allegations of ghosting on disgruntled staff he’d fired, including Mathis.

Mathis, however, said she left the clinic after she was ordered to backdate patient files to make it appear that they had a nurse’s approval. When Mathis refused, she was demoted, she said, and then suspended for continuing “insubordination.” She found another job and quit while still on a 30-day suspension, she said.

Although Feygin described Mathis as well-educated and knowledgeable about treatment, he said he asked her to leave after other counselors complained that she was difficult. NYSN's attorney, Joseph J. LaBarbera, said clinic policies and confidentiality requirements prevented further comment.

A Landlord’s Power

Imbert soon discovered that her landlord, not her counselor, had final say over many aspects of her treatment.

While she attended NYSN, Imbert also voluntarily participated in daily 12-Step meetings. She credits the meetings, not NYSN, for helping her maintain her sobriety. Still, her family wanted proof that she had graduated from an outpatient program before they would begin to trust her again. When her NYSN counselor wouldn’t certify that she’d completed treatment, Imbert begged him to at least cut back the number of group counseling sessions she had to attend so she could start to look for work.

“I was never a drug addict, and if I stay here I will become one,” Imbert said she told him. “I’m a grateful recovering alcoholic, and I want out of here.”

Imbert said her counselor agreed to drop two of her group sessions. When she skipped the first time, however, she said Baumblit intervened to get the sessions restored. She was forced to do a make-up the next Saturday. Imbert believed that if she did not go along, Baumblit would evict her.

Discussions between staffers at NYSN and the sober homes concerning patients were routine, according to former staffers of both. Mathis said counselors would sometimes accede to the directives of sober-home operators out of fear that clients would lose their housing if they didn’t.

Feygin also made it clear on numerous occasions that NYSN counselors had to comply with requests from the sober-home operators, current and former staffers told ProPublica. Crossing Baumblit could result in dismissal. NYSN Counselor Lyudmila German said she learned this lesson the hard way.

In January 2012, a patient came to German saying that Baumblit was going to evict him and that he had nowhere to go, German said. She gave the patient a pamphlet from a nonprofit called MFY Legal Services about the rights of residents of sober homes, or as they also are known in New York, three-quarter houses. MFY is the legal advocacy group that had sued Baumblit over conditions in his homes. “The only person who can evict you from a three-quarter house is a judge,” the pamphlet states.

Baumblit called German later that day at NYSN, she recounted in an interview with ProPublica. He told her that if she still had a job at the clinic the following day, he would tell his tenants to boycott NYSN. According to several staffers, Baumblit had made such threats before and followed through. Residents at his houses would stay away from the clinic en masse until Baumblit got what he wanted.

Shortly after her conversation with Baumblit, Feygin called German to his office, she said. Feygin told her that he depended on Baumblit for his business and that she should stay at home for a few days. Several days later, a letter arrived from NYSN notifying German she was fired for “numerous failures ... to follow directives given by your supervisors.” German had worked at NYSN for 10 years.

“She was fired legally,” said Feygin, who declined to go into detail about the circumstances.

Feygin denied that Baumblit has any sway over his business. “Yury cannot require anything,” he said. But he confirmed that most of NYSN’s clients come from sober homes. Former medical biller Raffudeen, whose job involved tracking patients, said that in 2012 more than half were referred by Baumblit.

Patients were carefully monitored by the use of slips, like the one above, according to interviews with NYSN patients, current and former staffers, and allegations in the MFY lawsuit.

The comings and goings of patients were carefully monitored, according to interviews with NYSN patients, current and former staffers, and the MFY lawsuit. After every counseling session, each NYSN patient who was a sober-home resident was given a slip to indicate they received a clinic service. They were required to return to their sober house with the slip. Those who came back without one were given an opportunity to make up the treatment session. If not, they risked eviction.

“It was clear that I had to bring back a slip, or I would be kicked out,” Imbert said. Asked about the slips, Feygin declined to say whether it was he or Baumblit who required them. He described them as a way for the sober homes to ensure that clients were receiving treatment.

Staffers close to Baumblit and Feygin said that the slips were used to track “points.” At the beginning of each month, they said, Baumblit and at least one other sober-home operator would come to the clinic to pick up checks based on how many points they accumulated.

“Dr. Feygin is paying these sober houses to send clients to his program and paying them a lump sum of money per month to keep his program stocked with clientele,” according to the complaint Raffudeen submitted to the Office of Medicaid Inspector General in April 2012. “They are threatened to come to N.Y.S.N. five days out of the week or the clients get kicked out of their living quarters.”

Federal and New York laws make it a crime to knowingly and willfully accept or offer remuneration of any kind to influence the referral of patients for Medicare and Medicaid services. Raffudeen's complaint was forwarded to the attorney general's office.

Feygin adamantly denied paying sober-home operators for patients. Asked if he had a financial or business relationship with Baumblit, Feygin replied: “It is absolutely not true.”

NYSN attorney LaBarbera denied any wrongdoing and said the clinic is "unfamiliar with the alleged complaint to the attorney general." He said NYSN "takes pains to assure that its business ... is conducted in an appropriate manner in accordance with applicable laws, rules and regulations."

Within the outpatient treatment community, it is common to hear stories about landlords soliciting kickbacks. “We have been approached by sober-home operators who ask, ‘What are you going to pay me?’” says Gary Butchen, executive director of a well-regarded outpatient program in the New York area called Bridge Back to Life Center. He said he instructs his employees to decline the offers.

MFY filed its class-action case against Baumblit in 2010 on behalf of residents in his sober homes. The lawsuit, in New York Supreme Court, alleges that Baumblit’s operation lured residents by making false promises, forced them to sign unfair contracts and unlawfully evicted them as part of an unjust enrichment scheme. Addicts were told they would receive vocational training and help finding permanent housing, the lawsuit claims, though none was actually provided.

The lawsuit also alleges Baumblit had “financial interests” in residents’ attendance at outpatient treatment programs.

In court filings, Baumblit disputed the accusations. All residents of his homes are required to sign a contract that sets out a curfew, mandates outpatient treatment, prohibits drug use and gives him the right to evict tenants for violations. “The House Code is designed to encourage the participants to live a more stable life, and to prevent the disruption of the quiet use and enjoyment of the premise,” a court document says.

Five months before Imbert arrived at Baumblit’s row of houses, Judge David B. Vaughan tossed out MFY’s lawsuit, ruling that Baumblit was running a transitional housing program that wasn’t subject to tenant-protection laws. The one-paragraph ruling did not address other matters. MFY has appealed.

No regulations dictate who can or can’t run a sober home in New York. Baumblit was sentenced to six months in jail and five years’ probation after his 2009 conviction for fraud and money laundering. He was released from jail after three months. The New York attorney general had indicted Baumblit, his wife and others in a scheme to fabricate car accidents and send people who were purportedly injured to medical clinics in which Baumblit secretly held an interest.

Baumblit is not the only sober-home operator to send patients to NYSN, and other outpatient clinics also take his residents. Because sober homes are unlicensed in New York, there is no official count of how many exist. Interviews by ProPublica with five other NYSN patients who were residents of three different sober homes echoed Imbert — they, too, were required to use the system of slips that tracked attendance and observed poor conditions in the homes and drug use by residents.

Working with a coalition of housing advocates, New York’s John Jay College of Criminal Justice is finalizing a report about sober homes. Advocates identified 317 addresses of three-quarter houses, primarily in Brooklyn, but caution that it is likely not a complete census. According to Robert Riggs, the principal author, researchers interviewed 43 residents, many of whom have similar stories about the slip requirement, mandated attendance at clinics and the threat of eviction for not attending outpatient treatment.

“People should be able to choose what treatment they go to,” Riggs said. “There is a coercive aspect when you tie housing, unlicensed by OASAS, to treatment.”

A History of Problems

During the past three years, regulators have found problems at NYSN time and again.

In October 2010, an investigator with OASAS interviewed Fred Middleton, then the program director for NYSN, about the clinic’s relationship with sober homes. The inquiry was in response to a complaint from an NYSN patient, who said he told his counselor about intimidation at Baumblit’s house. The counselor informed Baumblit, who then evicted the patient, the complaint said.

Middleton told an OASAS investigator the facility had a “contract/agreement” with Baumblit’s operation and another sober-home operator who sent clients to NYSN. Middleton also described frequent consultation between NYSN and sober-home operators, “usually about attendance or toxicology results.” According to the investigator’s notes, Middleton said none of that discourse was recorded in patients’ charts because “the charts would be too voluminous.”

Middleton also expressed “concern” about the way the sober homes were run. “He does not feel residents are treated fairly,” the investigator wrote. A final report on the complaint concluded that “the communication between NYSN and the sober homes is inappropriate clinically and violates the client’s right to privacy.”

Outpatient Treatment: Where To Learn More The Substance Abuse and Mental Health Services Administration, a federal agency, has a search tool to find alcohol and drug abuse treatment or mental health facilities and programs nationwide. If your clinic is in New York, the state regulator has a scorecard that rates licensed programs. Keep in mind that much of the information is self-reported by clinics. The National Center on Addiction and Substance Abuse at Columbia University publishes annual reports on the state of addiction services and hosts links to treatment resources. The National Association of Addiction Treatment Providers also hosts a provider lookup. Alcoholics Anonymous has a search tool to find meetings in your area, as does Narcotics Anonymous.

Asked what came of the 3-year-old inquiry, OASAS spokeswoman Jannette Rondó said it is under investigation by the attorney general’s office. A spokeswoman for the attorney general said that as a matter of policy, the office does not confirm or comment on the status of investigations.

Feygin said he did not know about the OASAS investigation and that Middleton was wrong about the existence of any “contract/agreement.”

In June 2012, Mathis also filed a complaint against NYSN alleging “excessive Medicaid billing,” problems with documentation and a counselor who inappropriately touched patients. Mathis was contacted by a representative from OASAS for more specifics but did not provide them, according to the complaint file. By that time, Mathis told ProPublica, she had taken another job and didn’t want to have anything more to do with NYSN.

While OASAS licenses and inspects clinics, the state’s Medicaid Inspector General focuses on financial fraud and abuse. The 2010 audit requiring NYSN to reimburse the state for $2.5 million in overpayments was conducted during Sheehan’s tenure as inspector general.

Auditors spent months going through NYSN’s records covering the period of May 2003 through December 2007. They found patient files missing treatment records, missing dates and signatures, and "excessive/unapproved visits." There was at least one error in 98 out of 100 patient files reviewed. The money was to be repaid by withholding 15 percent of NYSN’s future Medicaid billings. When Feygin later claimed financial hardship, the state reduced the amount it would withhold to 10 percent.

Recordkeeping problems and staffing deficiencies were identified during licensing reviews in 2010 and again this year. In four days at the clinic this past February, reviewers pulled 15 patient files for examination, as is standard practice. They cited NYSN for more than two dozen violations, including missing patient evaluations and signatures, incomplete treatment plans and mismatched Social Security numbers and birthdates. NYSN also lacked qualified staff to provide family counseling and coordinate health services, the reviewers found.

NYSN crafted a corrective action plan, and the state approved a two-year license.

The state can issue licenses for as little as six months to clinics that need more supervision. John Walden, who became NYSN’s new program director in late July, said NYSN was lucky to get a two-year license given the number of issues reviewers identified.

Feygin said that hiring and keeping qualified staff, particularly licensed clinical social workers, has been a constant challenge. Walden blamed past problems at NYSN on poor supervision and a difficult patient population. Many have mental health issues in addition to their substance abuse, he said, yet outpatient treatment is the most basic level of care they can get.

Experts say licensing inspections are typically too superficial to identify billing fraud. "They are feeble in detecting lies as long as you bill your lies correctly," said Malcolm Sparrow, a professor at Harvard's John F. Kennedy School of Government who has studied Medicaid and Medicare fraud. The key is to drill in with more rigorous audits at clinics that demonstrate a pattern of bad practices, he said.

Butchen, Bridge Back to Life’s executive director, said there have always been providers who take shortcuts, and the state does a poor job of ferreting them out.

“A real unethical provider can easily get a three-year license,” said Butchen, who is a past president of the Addiction Treatment Providers Association of New York State. “It’s not indicative of the greater proportion of people who actually care about what we do and run credible organizations.”

New York is in the midst of reorganizing substance abuse treatment in the state. A recent change limits the number of counseling sessions for which clinics can receive full payment to 75 per patient in a fiscal year. Payments for additional sessions are at reduced rates.

The state also has plans to contract with managed care companies to oversee patient care and move away from the fee-for-service model of payment. The hope is to “improve patient outcomes and assure that associated resources are well managed,” spokeswoman Rondó said.

NYSN is rated highly in one patient outcome tracked by OASAS on clinic scorecards the agency publishes.

The agency measures the rate of “discontinued use” — patients who successfully stay sober while in treatment — using a formula that takes into account length of stay, substance use and whether counseling is completed. The measure is self-reported by clinics, however, and NYSN’s rate of 85 percent is 10 percentage points higher than any other clinic its size or larger in New York City.

Feygin expressed surprise when informed of this. “I didn’t know it was that good,” he said.

“Not There to Help”

On March 11, Imbert officially completed her treatment at NYSN.

Fearing she might be evicted before she could move to a new place, Imbert approached Baumblit. According to her account, he told her she could only stay if she went to a different outpatient program, pretended she was new to recovery and started the process all over. In the end, she said Baumblit agreed to let her remain for four days after her NYSN graduation.

The city’s Human Resources Administration, which distributes housing assistance, had already paid Imbert’s rent for the entire month.

A relative helped her pay move-in costs for a room in a better house, and after a few weeks she found a job in sales.

Imbert’s education and family support set her apart from most of the addicts and alcoholics she met at NYSN and in the homes. Today, she said she’s been sober almost a year. She believes it was a miracle she survived.

“NYSN and the sober houses associated with them are not there to help people,” Imbert said. “They are there to exploit Medicaid.”

If you or a loved one has an experience in a drug treatment clinic as a counselor or patient that you would like to share, please email Jake at [email protected].