PHOENIX — A sweeping indictment announced Tuesday charges 20 individuals, a behavioral health company, and a church in connection with a $60 million Medicaid fraud scheme tied to Arizona’s sober living system.
According to authorities, Happy House Behavioral Health LLC fraudulently billed the state’s Medicaid program — the Arizona Health Care Cost Containment System (AHCCCS) — for mental health and addiction rehabilitation services that were never rendered, partially completed, or falsely submitted on behalf of deceased or incarcerated individuals.
The scheme reportedly involved referrals from sober living homes to Happy House, which then received government reimbursement and kicked back payments to those homes — a violation of Arizona law.
Prosecutors also allege that in July 2023, Happy House paid $5 million to Hope of Life International Church, which then wired $2 million to an overseas entity in Rwanda.
Happy House now faces charges including conspiracy, fraud, forgery, theft, and money laundering. A lawyer for the company has not responded to inquiries.
Hope of Life International Church responded to the allegations in a statement, saying it accepted the donation in good faith and had no involvement in the management or financial practices of the sober living facility that operated as a tenant on its property.
“The church’s only relationship was that of a landlord and, later, as a recipient of a donation — a donation accepted in good faith, consistent with its mission and longstanding practice,” the church said.
This case is part of a larger crackdown by Arizona Attorney General Kris Mayes’ office targeting Medicaid fraud and unlicensed sober living homes — many of which have disproportionately affected members of tribal communities. More than 100 individuals and multiple companies have been charged, and payments to over 100 providers have been suspended.
The fraudulent operations have had a devastating impact on Native Americans, particularly Navajos, many of whom were lured into the Phoenix area from remote areas and later left homeless when the facilities lost funding.
