School drug counselors charged with carrying out $46-million Medi-Cal fraud scheme


In middle schools and high schools across Los Angeles County, Atlantic Recovery Services offered some hope: a free, government-funded treatment program for children coping with drug and alcohol addiction.

But prosecutors alleged this week that the Long Beach-based program was set up to exploit children and defraud taxpayers, with supervisors telling staffers to forge student signatures, falsify treatment records, and enroll students who may have merely dabbled in drugs, even once.

Eight employees of the now-defunct drug treatment company have been charged in a decade-long scheme that netted more than $46 million from California’s Medi-Cal program, according to an indictment unsealed Wednesday. Six of the employees were arrested Wednesday morning and two others are expected to surrender to federal authorities, officials said.


“For counselors and supervisors to risk stigmatizing students as substance abusers, as alleged in this case, just to enrich themselves at taxpayer expense is outrageous,” said Christian Schrank, the Special Agent in Charge of the U.S. Department of Health and Human Services’ office of the inspector general, which helped with the investigation.

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Atlantic Recovery Services, which also was named Atlantic Health Services, received state and federal funds through contracts with Los Angeles County, according to the indictment. ARS in turn offered drug treatment programs to students at public schools in Lakewood, the Antelope Valley, Bell Gardens and Montebello, as well as several charter schools operated by the nonprofit Soledad Enrichment Action.

Prosecutors say that drug treatment counselors developed sign-in sheets for group sessions that didn’t occur, and that the company submitted bills for two “crisis intervention sessions” each month for each student, regardless of whether a relapse was imminent, according to the indictment. The scheme ran until 2013, officials said.

Lori Miller, who supervised managers and counselors, threatened to fire subordinates who did not submit enough bills, urging employees to “‘be creative’” in their billing and “‘to make it happen,’” according to the indictment.

Miller, 54, of Lakewood was arrested along with Maribel Navarro, 48; Carrenda Jeffery, 64; LaLonnie Egans, 57; Tina Lynn St. Julian, 51; and Shyrie Womack, 33, according to prosecutors.

Nguyet Galaz, 41, who supervised programs at 11 schools in South Los Angeles, South Gate and Compton, and Angela Micklo, 56, who supervised programs at schools in the Antelope Valley and San Fernando Valley, are expected to surrender during the next few weeks, according to a spokesman for the U.S. attorney’s office in L.A.

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A dozen other former ARS employees have already pleaded guilty to fraud charges in connection with the false billing scheme, including the program’s former medical director, Dr. Leland Whitson.

Whitson, 75, pleaded guilty to making a false statement involving a health care program. All 12 of the defendants who pleaded guilty are awaiting sentencing by U.S. District Judge Philip S. Gutierrez.

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