Hollywood Hills man sentenced in rehab kickback scheme

A Hollywood Hills man was sentenced on Friday to more than three years in federal prison for paying kickbacks to those who referred patients to his Orange County rehabilitation facilities.

Casey Mahoney, 48, was sentenced to 41 months in federal prison, as well as being ordered to pay $240,000 in fines, the U.S. Department of Justice said in a news release.

He was convicted in September of:

• One count of conspiracy to solicit, receive, pay or offer illegal remunerations for patient referrals
• Seven counts of illegal remunerations for patient referrals
• Three counts of money laundering

Mahoney recruited clients for two addiction treatment facilities that he owned: Huntington Beach-based Healing Path Detox LLC and San Juan Capistrano-based Get Real Recovery Inc., using so-called “body brokers,” the DOJ said.

These brokers make money referring patients to rehab and, in Mahoney’s case, “in turn paid thousands of dollars in cash to patients,” prosecutors said.

Some of these patients were supplied drugs so they’d qualify for “more lucrative levels of care at Mahoney’s facilities,” prosecutors said. They were also sometimes introduced to drug dealers at Orange County motels. Some of these patients later overdosed and died.

In this scheme and others like it, the targets are often health insurance companies.

“Mahoney also requested that his employees send brokers to track down former patients with lucrative insurance policies, which he called his “‘most wanted list,'” the DOJ said. 

To cover up the scheme, Mahoney entered “sham contracts” with body brokers that promised a fixed payment that wasn’t determined by patient volume or value. That, however, was not the case, prosecutors said.

“In reality, Mahoney and the brokers negotiated payments based on the patients’ insurance reimbursements and the number of days Mahoney was able to bill for treatment,” the DOJ explained.

Mahoney is far from the only person accused of wrongdoing in the Orange County drug rehab industry.

Scott Raffa of Newport Beach was charged with a similar alleged arrangement, as was another O.C. rehab worker who allegedly paid body brokers to refer patients to him.

In another alleged scheme, six people worked together to have sober-living patients undergo medically unnecessary surgeries that racked up tens of millions of dollars in costs.

“Bribes and kickbacks compromise the integrity of substance abuse treatment facilities and undermine patient care,” said Acting United States Attorney Joseph McNally. “As the sentence imposed today demonstrates, those that engage in body brokering will go to federal prison.”