Sometimes, the feds bring cases because a problem is so huge there’s no way it can possibly be eliminated, the accused’s attorney mused. So they put one hand over their eyes, reach into the barrel with the other, and pull out what’s not necessarily the worst or the biggest or the baddest — but the one they can reach.
That, said federal defense attorney Matthew A. Schindler, is precisely what’s happened to Luis Guerrero, 53, of Santa Ana, who pleaded not guilty to one count of conspiracy and three counts of offering or paying for addiction treatment referrals in federal court on May 23.
Guerrero was a “patient intake coordinator” who conspired to pay illegal kickbacks to “body brokers” in exchange for new patients to fill his quota, a federal grand jury indictment alleges. Those patients would receive thousands of dollars for agreeing to enter treatment as well, it says.
“He’s seen as one of the people who got money,” Schindler said with some incredulity. “He had an hourly rate and sat at a desk. He was working two jobs — one at night so he could take care of his family. If there’s evidence he got a dime for what he did, I haven’t seen it.
“I get the sense there are bad actors and people acting with malice or corrupt intent in this system,” he continued. “But these kind of flag-raising prosecutions also tend to encompass people whose culpability falls at a totally different end of the scale. Where is his money? My guy got no money.”
We’ve been covering these cases for many years now. Defense attorneys tend to keep a low profile. But federal prosecutors are in for a fight on this one — Schindler was one of the defense attorneys on the infamous Bundy case, when armed militia members occupied a federal wildlife refuge in Oregon and refused to leave. Seven were charged with conspiracy — and all were acquitted.
Weak case?
This indictment alleges that Guerrero arranged to get a $5,000 electronic payment to a patient during a call with a broker over an encrypted messaging service. “We’ll do something to put money in her hands before she leaves or before she arrives [home],” he allegedly said.
And that, in October 2020, he negotiated a $37,000 payment to brokers in exchange for five patients. He needed to meet a monthly quota, the indictment said.
“I see no indication in the indictment that he received anything based on his alleged involvement in the kickbacks,” Schindler said.
One of the laws Guerrero is accused of breaking — 18 U.S. Code § 220 — was passed in 2018 (after portions of the Southern California News Group’s initial reports about fraud, abuse and death in the private-pay, insurance-money-fueled segment of the addiction treatment industry were presented at congressional hearings). This law makes it illegal to pay for referrals to recovery homes, clinical treatment facilities and laboratories.
Schindler hadn’t come across this one before. He had to look it up. A relatively new law in an area where there was a culture of paying for referrals? The rules are very technical, and people working in the industry could genuinely believe what they were doing was appropriate, he said.
The feds didn’t try to educate Guerrero on the law’s requirements — it only attempted to prosecute, Schindler continued. And in this multi-million-dollar market, the government’s $37,000 figure is nothing. Guerrero has no fancy boat, no opulent house, none of the trappings of excess. He’d score very low on a list of malevolent actors, Schindler said.
‘Sober Home Initiative’
In the indictment’s wake, Guerrero was placed on unpaid administrative leave from his job at LEAD in Orange, Schindler said. He has three kids and works nights at a discount department store.
Guerrero’s arrest is part of the U.S. Department of Justice’s crackdown on fraud in Orange County’s addiction treatment industry. “The Sober Home Initiative,” as it’s called, has led to 14 indictments.
The patients who were allegedly brokered in this case — so the rehabs could charge their insurance companies tens of thousands of dollars — had health care benefits through Anthem Blue Cross and Cigna Health and Life Insurance, among others, the indictment said. The operation allegedly tried to cover its tracks with a “sham contract” that prohibited payments to brokers based on the volume or value of a broker’s referrals.
If convicted of all charges, Guerrero faces up to 35 years in federal prison. He was ordered released on $20,000 bond. Trial is slated for July, but Schindler said it won’t come to that.
“This is not someone getting rich from fraud,” he said.
The indictment made it sound like more arrests are coming. We’ll keep you posted.
