Lawmakers target predatory practices in addiction treatment industry

Lawmakers target predatory practices in addiction treatment industry / March 7, 2025 / NJ Spotlight

By Bobby Brier

New Jersey’s substance use treatment industry is under renewed focus after state lawmakers advanced a pair of bills that aim to better regulate the industry by increasing oversight on patient referrals and banning deceptive marketing practices.

The legislation comes in response to a 2024 opens in a new windowState Commission of Investigation report that found unchecked fraud, unethical conduct and deception from businesses at every level of the recovery process. The commission uncovered opens in a new windowfraudulent billing, tax evasion, deceptive marketing practices and other misconduct done to fund the lifestyles of addiction treatment executives rather than aid their clients in overcoming substance use disorder.

“The SCI’s reported findings last February were disturbing, and as the state invests more dollars in the treatment of addiction, we need to ensure that patients are actually being treated rather than used for profit,” Sen. Joseph Vitale (D-Middlesex), a primary sponsor of both bills, said in a statement.

The 2024 report followed an investigation by the commission into the addiction rehabilitation industry which commission members and witnesses then detailed in a hearing at the State House. During that testimony in 2022, commission agents highlighted what they said were some of opens in a new windowthe $42 billion industry’s alleged predatory practices, including one known in the industry as “body brokering.” That’s a practice where some recovery coaches — professionals who provide guidance and support to people in recovery — get paid to refer clients with full insurance coverage. The practice is illegal in New Jersey and against federal law, but allegedly prevalent in a business that prizes clients with insurance.

Deceptive practices

opens in a new windowUnder the bill that would ban deceptive marketing practices, heard Monday in the Senate Health, Human Services and Senior Citizens Committee, treatment providers in the state would be required to provide accurate and complete information on the types and methods of their services, the location where the services are provided and the treatment provider’s name and brand name. They would also be required to give their phone number, mailing address and business location address in any marketing or advertising materials.

Elissa Tierney, who testified at the committee hearing, said in a recent interview with NJ Spotlight News that she had to deal with these deceptive marketers while in recovery from prescription pain medication in 2019.

‘When people are ready for recovery, they’re in desperate times and they need to be able to know that the help they need is legitimate.’ — Sen. Joe Vitale (D-Middlesex)

“I called one of the hotlines one time when I was fairly new to this process and didn’t really understand the treatment business, and I was probably contacted by 30 different facilities in Florida telling me not to go to the place that I had already picked, that people die there, [that] it’s horrible,” said Tierney, the lead organizer for opens in a new windowthe Not One More NJ campaign.

opens in a new windowThe campaign, started in 2019, is focused on ending the overdose crisis in Ocean and Monmouth counties while also connecting people in those counties to services for substance use disorder. Not One More NJ also aims to end the stigma surrounding the disorder.

Tierney was told that if she went to one treatment facility being offered by a hotline marketer, a member of the facility would pick her up from the airport and she would be offered pedicures and massages, she said. Tierney then asked about the actual treatment involved, but received limited information about the recovery programs she would receive during a month-long stay at the facility, she said. “Unfortunately, when you get there, most places lie just to get you in the door and to take your insurance money,” she said.

‘Body brokers’

Once people go to treatment facilities offered through deceptive marketing practices, “body brokers” will then refer them to different partners, so the person is moved from detox to treatment to partial-care programs and then often back to detox, according to Rachel Wallace of Hackensack Meridian Health Carrier Clinic.

“The Google Ads that pop up will often change their phone numbers frequently, so as soon as people are onto them — that they may be engaging in deceptive practice — the website goes away, the numbers change and they’re just kind of popping up with another phone number and another front,” Wallace, the senior director of substance use counseling services at the clinic, said in an interview with NJ Spotlight News.

“I always say there’s not money to be made in recovery,” said Wallace who also testified this week. “The money to be made is in addiction. It’s really big business.”

In response to the commission’s report last year, one owner of an addiction treatment program said in part that some of the accusations were “false” and “misleading.” Another business owner maintained that he has “complied with all applicable laws and regulations” concerning the operation of his program and said that he “vehemently” rejects any suggestions to the contrary, implicit or otherwise, contained in the commission’s report.

Under opens in a new windowthe proposed bill, it would be illegal for a treatment provider to make false or misleading statements about their status as an in-network or out-of-network provider based on a person’s insurance plan and to suggest or imply that an affiliation with another treatment provider exists, unless the other provider has given express, written consent to indicate that affiliation.

Any treatment provider who does not follow the measures outlined in the legislation could be liable for fines of up to $20,000 for each violation. Additionally, a person who is injured because of the treatment providers’ illegal practices could sue, among other actions outlined in the bill. The Office of Licensing in the state Department of Health could investigate alleged violations of the bill and suspend or revoke a treatment provider’s license if they found any illegal activity.

Criminal penalties

A second bill heard by the Senate committee this week would increase the criminal penalties for a person who pays or receives any fee, commission or rebate for referring patients to a substance use disorder treatment facility. It would also be a third-degree crime, under the proposed bill, to “knowingly assist” or urge any person to make or receive a payment, fee or commission.

Under the bill, opens in a new windowa $50,000 fine would automatically be applied to any person who violates these patient referral laws. Health care providers, including licensed doctors, nurses and psychologists, along with health care facilities, nonprofits and recovery residencies are explicitly included under the scope of these patient referral laws, according to the bill.

“When people are ready for recovery, they’re in desperate times and they need to be able to know that the help they need is legitimate,” said Vitale.

Both bills, opens in a new windowS-3952 and opens in a new windowS-3955, unanimously passed the Senate Health, Human Services and Senior Citizens Committee earlier this week. Their Assembly counterparts have already passed.