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- By Elyse Wild
For nearly four years, a multi-billion-dollar Medicaid scam involving hundreds of fraudulent providers in Arizona victimized Native Americans under the guise of addiction care.
Now, advocates are hoping for accountability as the state faces a class action lawsuit representing 7,000 Native Americans affected by the fraud — 2,000 of whom are dead or missing in possible connection with the scheme — alleging it had knowledge of the scheme as early as 2019, nearly four years before it took action against the perpetrators.
The state should have seen it coming, according to the lawsuit. A 2018 Congressional hearing attended by an Arizona Congressman had already warned about fraudulent sober living homes nationwide, preying on vulnerable individuals seeking addiction treatment. The hearing detailed reports of human trafficking, kickbacks, rapes, house managers trading drugs to residents for sex, and operators exploiting federal laws for profit.
The testimony highlighted the deadly consequences of the fraudulent sober homes. In one case, a 23-year-old man died from an overdose after a facility failed to recognize his symptoms or keep overdose-reversal medication on hand. “In the worst cases, some bad actors do not encourage recovery at all, but exploit vulnerable individuals in order to collect insurance payments,” the testimony notes.
The Scheme
Between 2019 and 2023, thousands of Native Americans in Arizona and as far away as Montana reported being kidnapped – forced into unmarked SUVs and vans under false pretenses — given alcohol and drugs such as fentanyl or methamphetamine, subjected to fraudulent mental health services, held prisoner, and eventually ejected onto the street or dropped off in remote rural areas with no means of transportation. Victims were enrolled in the American Indian Health Program through the state’s Medicaid Agency, the Arizona Health Care Cost Containment System (AHCCS). The homes billed AHCCS for patient care in excess of $1,000 per day per patient.
Reva Stewart (Diné) runs Turtle Island Woman Warriors, a Phoenix-based nonprofit that offers assistance to Native people who have been victimized by the scam. The group’s website includes a portal where individuals can verify and report sober living homes. People reach out looking for their loved ones whose disappearances or deaths are suspected to be tied to fraudulent homes.
“It’s human trafficking,” Stewart said. “That’s what this is.”
The 230-page complaint, filed in Maricopa County Superior Court by Phoenix-based BrewerWood law firm and Albuquerque-based attorney Brook Laskey, alleges that the state had knowledge of the fraud as early as 2019, when former Gov. Doug Ducey was in office, “according to its own internal documents,” but knowingly continued to make payments to fraudulent sober living home operators.
The mass fraud came to light in May 2023 when state officials held a press conference announcing they would take action against 100 fraudulent providers involved in the scheme. By August, the number grew to 131, and by May 2024, it ballooned to 375 providers.
When Native News Online asked Gov. Katie Hobbs’s office about the allegation that the state knew of the scam and failed to act, her office replied in an email:
“We cannot speculate about what the Ducey administration knew, but as soon as Governor Hobbs became aware of this issue, she took action to identify the root causes of the problem, hold bad actors accountable, and protect vulnerable Arizonans. Governor Hobbs has worked tirelessly to address the exploitation and abuse by focusing on improving and enforcing high standards of care, ensuring state agencies respond quickly to complaints of abuse, and protecting taxpayer dollars. Governor Hobbs is committed to continuing this fight and working with Tribal leaders and communities to support the ongoing response and recovery from this crisis.”
Early Warning Signs
Stewart was among the first to raise the alarm in 2022. She was managing Drum Beat Indian Arts, a Native American craft store near the Phoenix Indian Medical Center, where she saw white vans circling and waiting to pick up patients as they were discharged from the facility. At the same time, a display board outside of the store began to fill with posters of missing people from the state’s various tribal nations.
Reve Stewart (Courtesy photo)“I started watching these vans — they would just caravan outside the hospital, by the bus stops, and then through our parking lot,” Stewart told Native News Online. “At that time, I didn’t understand either, but there were so many vans. I also started seeing more missing posters from Navajo Nation coming up, then White Mountain Apache, San Carlos, and so many.”
Months later, when she made contact with a cousin who had fled one of the fraudulent homes, she understood the scope of what was happening. Her cousin had been coerced into a white van in Farmington, New Mexico, with four other people. They were immediately provided with alcohol and left at a house in Phoenix, about six and half hour's drive from Farmington. After refusing to give staff at the home her social security number, she was given a bus pass and kicked out. Stewart put her cousin’s story on social media and was flooded with messages from people who had the same experience or those with missing relatives who got into a white van and weren’t seen again.
She took information from everyone who reached out, collecting all documents in a banker’s box. She presented her findings to officials from Arizona’s Department of Health Services, AHCCCS, and tribal officials.
“I said, ‘I have all this information. People are going missing. And I believe they’re in these homes, these homes that are picking people up,’” Stewart said. “They said, ‘Thank you, we will look into it.’”
Stewart said none of the officials took the banker's box.
Today, she says, the fraud continues as she hears of fraudulent homes targeting Native Americans opening in other states, such as California and Utah.
“It’s genocide all over again,” she said. “They are targeting our people, and it’s like it’s not important.”
Limited Accountability
After the May 2023 press conference revealing the fraud to the public, the state of Arizona brought criminal charges against some of the fraudsters, but for many, justice is falling short.
Last June, one man whose company made nearly $21 million while involved in the scam was sentenced to just four years of probation and ordered to pay $2 million in restitution.
In November 2024, Arizona — home to 22 tribal nations — announced a $6 million fund for Native communities affected by the scheme. Tribes can apply for grants up to $500,000 until Jan. 31, 2025. Advocates like Stewart say the amount isn’t nearly enough to make up the humanitarian cost of the fraud.
“What is that going to do? You can’t even build a building for that amount,” she said.
The class action lawsuit against the state doesn’t name a specific dollar amount. Stewart hopes the legal action will bring about accountability.
“I want these families to be able to hear from the government,” she said. “I want them to say, ‘We did this and we messed up, yeah, and we want to apologize to every single person that was affected by this.’ That’s what I want for every single person who has been hurt by this.”
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