Column: 'Body brokers' profit from heroin addiction

Posted at 7:26 AM, Dec 13, 2016
and last updated 2017-02-04 22:36:38-05

The heroin and pain pill crisis is a full-blown epidemic in our community. But treatment for this addiction crisis is inadequate and the death toll continues to grow. This is the first of a series of columns examining a broken system. You can also watch our WCPO 9 On Your Side special, "Heroin: Fixing a Broken System" at 7 p.m. Thursday.

David Holthaus researched these stories for eight months, with help from WCPO's Heroin Advisory Board, a group of experts, parents and recovering addicts. Holthaus has been a Cincinnati journalist for more than 25 years and is currently managing editor, opinion and engagement for


In early June, Heather Schille was on a Frontier Airlines flight bound for Los Angeles, nearly giddy with the opportunity ahead.

Heather and her friend happy to be heading to rehab in California. That soon changed.

She was looking forward to a couple of months in sunny Southern California to begin treatment for her addiction to heroin and pain pills. 

“Headed to the airport to leave for California to begin detox and treatment I’m so excited to begin this journey to start the next chapter of my life,” Heather wrote on her Facebook page.

But three weeks later, she was homeless, sleeping on the beach, with nowhere to go.

She had been kicked out of rehab because of a glitch in her insurance, insurance that had been arranged for her just days before by a Greater Cincinnati man who is making a business out of connecting addicts here with treatment centers in California.

It's part of a practice that some say takes advantage of addicts and the lack of treatment facilities here in the region.

An Underground Business

The lack of drug treatment programs in the tri-state has given rise to an underground business known as “patient brokering,” where addicts desperate for help are recruited to far-away, for-profit programs, sometimes with bad results.

Just like brokers in other businesses, patient brokers serve as go-betweens, in this case linking addicts with treatment programs in need of customers. But in health care, the practice borders on illegality, and might cross the line, depending on the specifics, said Jeffrey Lynne, a South Florida attorney who specializes in addiction treatment issues.

In general, federal law makes it illegal for health care providers to offer commissions, bonuses, kickbacks and other compensation for patient referrals. The theory is health care decisions should be made according to the patient's best interests, and not be influenced by financial incentives.   

In the drug treatment business, brokers will arrange flights, line up health insurance and take care of incidentals to deliver the client to treatment, which is usually in a sunny place like Southern California or South Florida, places that have a glut of rehab facilities. But offering incentives to persuade patients to choose a health care facility is usually prohibited.

For the broker and the rehab centers, there’s big money to be made. But the heroin addict in need of help can be the loser.

A 'Marketing Rep' by Another Name

At 27, Heather, with two young children and shaken by the overdose death of her sister, had made up her mind to get clean after years of a steady diet of Percocet, Oxycontin and heroin.

She had found a California treatment center called Pacific Shores through broker James Arnold. Arnold calls himself a “marketing rep,” and says he works with out-of-state treatment centers. 

He’s also known in recovery circles as a “recruiter” or a “referral.” Others have called those who do that work “patient brokers” or even “body brokers.”

Arnold says his work is about helping drug abusers find treatment.

“I’m working on trying to help people get in to facilities,” Arnold said.

If they need insurance, he will buy it for them. He will pay for the airfare to get there. When the patient is delivered, Arnold is paid by the treatment center. His investment in airfare and insurance pays off when he gets a check from the treatment center.

Rehabs in California often come with swimming pools, another attraction for out-of-towners.

Arnold would not say how much he is paid. But Laura Kunz, an Anderson Township native, has witnessed the work of patient brokers through her job as an executive in the treatment industry in South Florida, where brokering is rampant. She said brokers typically have deals to supply patients to three or four treatment centers. The average pay is $3,000 per patient, she said.

That type of arrangement can pay off handsomely for the broker and the treatment center. Rehab centers typically bill insurance $30,000 or $40,000 for a month of residential treatment for one client, making the broker's "finder's fee" a worthwhile investment.

Arnold confirmed the general outlines of the deal, but wouldn't get into specifics.

“Sure. Yeah, absolutely,” he said when asked about the financial arrangement. But, “I’m not really trying to get into the financial arrangements I have with the facilities,” he said. “That’s really not what it’s about for me.”

When asked about his business, called Luxe Rehab Placement, Arnold is careful how he describes it.

“I partner … I have aligned myself, I should say … with some of the top treatment facilities out on the West Coast,” Arnold said.

Arnold, originally from the Butler County town of Trenton, said he had been operating in California, but earlier this year moved back to the tri-state.

“I brought my business here to be able to help people in the area,” Arnold said.

'Underbelly of the Industry'

Greater Cincinnati is certainly ripe for someone who wants to profit from the addiction treatment business. The region has been beset with an epidemic of pain pill and heroin abuse, and has seen deaths from drug overdoses climb year after year. Meanwhile, a treatment system pieced together decades ago to address alcoholism has been overwhelmed by the onslaught of heroin and opiates.

'Individuals and families are being completely taken advantage of.'

Finding treatment when it’s needed can be difficult.

But California and Florida have just the opposite problems – a glut of treatment facilities.  Florida alone is home to about 750 treatment centers. A patient broker can connect the high demand of drug users here with the oversupply of rehab outfits that need clients in those states.

But the struggling addict can end up being a pawn in an expensive game. And some centers in the $1 billion industry in Florida have come under FBI investigation. 

“Down (in Florida), we refer to it as the underbelly of the industry,” Laura Kunz said of brokering.

She said addicts are being abused by brokers and treatment centers whose main motive is profit, not treatment.

“As a human being, it makes me very sad,” Kunz said. “Individuals and families are being completely taken advantage in their most vulnerable and desperate state.”

Illegal? Unethical?

But the practice doesn’t appear to be on the radar yet of the Ohio Attorney General’s office, the Ohio Department of Mental Health and Addiction Services or the Ohio Department of Insurance.

The practice isn’t widespread here and representatives for those Ohio agencies would not comment definitively on whether Arnold’s business arrangements are legal.

But they are certainly questionable, said Linda Gallagher, vice president of the Hamilton County Mental Health and Addiction Services Board.

“I don’t know if it’s legal in Ohio, but it’s certainly sounds unethical,” she said.

Arnold said his practice is neither illegal or unethical and compared it to the marketing that nursing homes and other health care facilities do. "All we want to do is help people get off heroin," he said.  

'Money Pawn'

For Heather, Arnold’s help was welcome at first, but she soon came to see herself as a “money pawn.”

She said Arnold asked her to call him every day for a month before he would place her. Because he would be spending his own money up front, he wanted to make sure she was serious and she would stay in treatment long enough for him to get paid, she said.

It actually took more than two months for her to get in, something Arnold acknowledges. Although wait times can be long to get into Greater Cincinnati treatment centers, a spot can usually be found within two months or less.

“He kept telling me, ‘You’re going soon. You’re going soon,’" Heather said. "Then the day before, he says, ‘All right, plane ticket tomorrow.’”

"Thank you for calling. Bye bye."-- "Mark" of Pacific Shores Recovery, Orange County, Calif.

The first stop was a residential detox facility called Fresh Start. Heather was told she would be there seven to 10 days, the usual amount of time it takes to detox from heroin. Fresh Start kept her 14 days in order to bill her insurance more, she said. As an incentive to stay longer, they offered to have her nails done and provide her with other perks, Heather said.

Calls to Fresh Start were referred to a manager named Lacey, who they said was only there on Wednesdays. She did not return the calls.

From there, Heather was sent to Pacific Shores, a long-term residential treatment facility. She had a temporary insurance card to be admitted, but after a few days, the management told her the insurance had been paid for May, not June. She didn’t arrive in California until June 9.

At 10 p.m., she was kicked out, with no fall-back or transition plan, on to the streets of Costa Mesa, 2,200 miles from home.

From Fresh Start, she bounced around to two other facilities, one of which allowed her to stay for 30 days. But another insurance problem meant she couldn't renew for another month, and once again, she was out on the streets.

She said Arnold “definitely” canceled her insurance because she had found a new broker to work with. Arnold denies it.

“I’ve never canceled anybody’s insurance,” Arnold said.

Either way, it took about two weeks for her insurance to be activated again. During that time, she stayed on the beach, in cheap hotels and with her treatment sponsor. At one point, she suffered a seizure and required emergency treatment at Hoag Hospital in Newport Beach.

Arnold claims he is not in business for the money.

“The reason I’ve been successful at what I’m trying to do is I truly believe in trying to help people,” he said.

A Sign of Things to Come?

Arnold said he works with “some of the top treatment facilities out on the West Coast.”

But Pacific Shores, where Heather was sent, has been the subject of neighbors’ complaints about noise, trash, deliveries at all hours, cars double-parked. One neighbor complained to a zoning board about a person who had been kicked out of the program and was living in a car on the street and doing drugs.

A call to Pacific Shores was answered by a person named Mark who said he could speak for the facility, but then said, “I can’t confirm anything. That’s it. But thank you for calling. Bye-bye.”

Minutes later, he called back and confirmed his company works with marketers like Arnold.

“We use seven different marketing companies,” he said. “Different marketing companies cover different parts of the nation.”

What about Arnold’s Luxe Rehab Marketing? “It doesn’t ring a bell right now.”

Mark would not provide his last name, claiming the rehab program uses only first names, as in the Alcoholics Anonymous tradition.

“In AA, we just go by first names,” he said.

After more than three months of being bounced around from place to place and enduring spells of homelessness, Heather eventually returned to suburban Cincinnati in mid-September.

In mid-November, authorities in South Florida began cracking down on patient brokering, which local media has reported to be widespread there. They arrested and charged several people with breaking Florida’s patient brokering law.

It could be a sign of things to come here.

• The shadow system of treatment
• Heroin addicts: 'We can't just throw them out'
• Heroin drug saves lives, but it's hard to get
• One long road from heroin addiction to recovery