LOS ANGELES - The co-owner of a Los Angeles drug and alcohol treatment facility pleaded guilty March 14, 2017 to 46 felony counts related to a $175 million fraudulent health care billing scheme. Kristen Wallace, 44, was immediately sentenced to 11 years in state prison.
Wallace entered an open plea to
- five counts of insurance fraud,
- seven counts of grand theft of personal property,
- six counts of identity theft and 28 counts of money laundering.
The open plea means a sentence was not negotiated with the District Attorney’s Office. A restitution hearing is scheduled for April 17, 2018.
“It is absolutely mind-boggling to think of the number of cases in which insurance companies are being fraudulently billed in this state,” said California Statewide Law Enforcement Association (CSLEA). “California Department of Insurance investigators certainly have no shortage of work. And work their cases, they do, through thorough, complicated investigations, to arrests, to assisting with prosecutions. They know their stuff.”
Wallace and Christopher Bathum, 56, who together owned Community Recovery of Los Angeles, were charged in the billing scheme in November 2016. The company operated treatment centers in Southern California and Colorado.
The scheme involved obtaining multiple health care insurance policies for clients by using their personal identifying information and falsifying the clients’ circumstances to obtain the policies. The patients were unaware that policies had been issued in their name. In addition, former clients were billed after their treatment ended while those clients were still working at Community Recovery and no longer receiving treatment.
Between June 2012 and December 2015, an estimated $175 million was fraudulently billed. In most instances, bills were sent for services allegedly never provided. About $44 million was paid out by five insurance companies, the prosecutor said.
Bathum is charged with the same 46 counts as Wallace had faced. His next scheduled court appearance is a pretrial conference also April 17, 2018.
Bathum faces up to 45 years and four months in state prison if convicted as charged.
Last month in a separate case, Bathum was convicted of sexually assaulting seven women who were patients at his treatment center.
A sentencing setting hearing in that case is scheduled April 17th. He faces a maximum possible sentence of about 65 years in state prison and lifetime sex offender registration.
This case was investigated by the California Department of Insurance and the District Attorney’s Office’s Bureau of Investigation.