Arizona Faces Class-Action Lawsuit Over Fraudulent Sober Living Homes Targeting Native Americans
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Arizona Faces Class-Action Lawsuit Over Fraudulent Sober Living Homes Targeting Native Americans

State Agencies Accused of Negligence in $2.8 Billion Medicaid Fraud Scheme Impacting Thousands

PHOENIX — Arizona is being sued in a class-action lawsuit representing approximately 7,000 Native Americans who were victims of fraudulent sober living homes. The lawsuit, filed by BrewerWood Law Firm, alleges that state agencies enabled schemes that stole $2.8 billion from taxpayers.

“These fraudulent operations caused significant harm, and the state knew about it,” attorney John Brewer told KTAR News. Brewer claims state officials were first warned about abuses of the American Indian Health Program in 2019.

Lawsuit Targets State Agencies

The class-action lawsuit names the Arizona Health Care Cost Containment System (AHCCCS) and the Arizona Department of Health Services (ADHS) as defendants.

AHCCCS, which oversees the American Indian Health Program, is accused of approving fraudulent billing practices without sufficient oversight. Brewer stated, “Essentially, what they were doing is they were just billing, and AHCCCS was approving.”

ADHS is also accused of negligence, with plaintiffs arguing the agency failed to intervene and prevent the fraud.

Fraudulent Practices and Targeted Victims

The schemes, largely operated by individuals from Nevada, exploited Arizona’s Medicaid fee-for-service program. Fraudsters specifically targeted Native American communities, traveling to reservations and coercing individuals into vans under false pretenses—a practice described as the “white van syndrome.”

One tragic case involved Carson Leslie, who died after being given alcohol inside one of these vans near Flagstaff. According to Brewer, Leslie’s blood alcohol level at the time of his death was 0.543. His body was discarded after he died in the vehicle.

The impact of these schemes has been devastating. Fraud victim advocate Reva Stewart estimates that approximately 2,000 individuals have died or gone missing due to the fraudulent sober living homes.

Public Health Emergency and Calls for Accountability

The Navajo Nation declared a public health emergency in 2023 due to the widespread Medicaid scams. Brewer described the situation as “one of the largest frauds in Medicaid history,” noting that federal funds were also involved.

Arizona officials have not yet commented on the lawsuit, which underscores a broader call for accountability and systemic reform to protect vulnerable populations.

The lawsuit represents a crucial step toward justice for victims and shines a spotlight on the need for improved oversight of state-run programs.