Exposure to Jail, but not Fines: An Odd Conundrum Involving Free Housing Offered to Those in Recovery

For the first time in my career, I am in the midst of a government investigation that I think reflects terrible policy. And it features the really puzzling position that Congress exempted some conduct from civil monetary penalties, but still wants it prosecuted it under the Anti-Kickback Statute.

The government inquiry involves the legality of a substance use disorder program offering free housing to clients in recovery. This past week, an FBI raid in Minnesota drew attention to this issue, though that is not the situation I am involved in.

If the allegations in the government’s affidavit supporting the warrant are true (never a given), that case is remarkably different from the one I have been working on. 

My client has said that as long as their client is actively participating in treatment, and for several weeks after the treatment ends, they will pay a significant subsidy (usually enough to cover rent) at an approved sober home for the client on the theory that clients without a stable place to live are far more likely to suffer a relapse. The logic is supported by considerable research. 

Now, this is where things get weird. I recently mentioned the difference between the Anti-Kickback Statute and the Civil Monetary Penalty Provision. A violation of the Anti-Kickback Statute is a felony, while the Civil Monetary Penalty (CMP) Provision only involves fines. The CMP Provision prohibits offering a beneficiary anything that is likely to influence their choice of supplier. But Congress included a provision that if something promotes access to care and poses a low risk of harm to patients and federal healthcare programs, it doesn’t violate the CMP law.

The free housing I am describing clearly fits squarely within the exception.

Housing promotes access to care. Multiple insurance companies administering Medicaid payments have given awards for programs like this, demonstrating that the payers are certain it provides a low risk of harm to the program, and housing improves patient safety.

When I made those points to the government, they rejected my arguments. Now, to be fair to them, part of their objection is that they claim the program presents a risk of harm to federal healthcare programs. But given that so many insurance companies like it, that is obviously a red herring. Their main argument is that the remuneration exception in question only applies to the Civil Monetary Penalty Provision, and not to the Anti-Kickback Statute.

A federal court considered this question in the Narco Freedom case in New York. The Court concluded that satisfying the CMP exclusion didn’t provide safety from prosecution under the Anti-Kickback Statute. That seems like a really weird conclusion. It would mean that Congress said, “we want people to do things that promote access to care, and to encourage it, we promise not to fine anyone offering such a program. But remember, while we will not fine you, we might still put you in jail.” 

I find it difficult to believe that could possibly be the intent of Congress. It doesn’t make any sense. The facts in Narco Freedom were very damning, resulting in the conclusion that clients were housed in unsafe locations with exposed asbestos, and that many of the clients didn’t even need treatment. The court could have said that the way that particular program operated endangered beneficiaries. I wish the court would have taken that route, rather than suggesting that the exception Congress passed only limited fines, not jail.

Finally, it is worth noting that many states will pay for housing for recovery residences, but the programs can be administratively difficult for clients to navigate quickly. It is hugely ironic that the government would prosecute organizations voluntarily taking on an expense that would otherwise be borne by the state and labelling it “fraud.”   

I know that Bruce Springsteen is a national treasure, but I don’t think Congress wants us to be singing, “Well it seems like I’m caught up in your trap again/And it seems like I’ll be wearin’ the same ol’ chains/Good will conquer evil and the truth will set you free/Then I know someday I’ll find the key.” 

That is what I’ve been telling my client. As a matter of policy, compassion, and common sense, this is an important fight. I just hope that the powers that be start to recognize the importance of housing people in recovery, and how misguided it is to label a program that insurers have with full knowledge funded and honored as some kind of “fraud.”