Philip Ganong, his wife and their 34-year-old son were charged with conspiracy to commit medical insurance fraud, 13 counts of insurance fraud, and 26 counts of money laundering after collecting urine samples from drug addicts at their chain of Southern California sober living centers, creating labs to test it, and charging insurance companies to analyze it.Prosecutors allege the family used a network of doctors and others to swindle insurers out of as much as $22 million for unnecessary tests or those never performed.  The Ganongs have pleaded not guilty and are awaiting trial.The Ganongs case only illustrates a larger problem concerning the oversight, or lack thereof, of California’s drug rehabilitation industry.  Some of the most prominent complaints included: Drug counselors and others can run sober living homes and some types of treatment centers without passing any kind of criminal background check; addicts and families considering rehab have no way to access the records of treatment centers or staff; and, the state is slow to reform and crack down on crooked treatment center operators.

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California is “the wild, wild west right now,” said Kansas Cafferty, a commissioner with the National Certification Commission for Addiction Professionals.  “There (are) a lot of places committing crimes that authorities are trying to enforce, but they can’t keep up with it.”Marlies Perez, chief of the California Department of Health Care Services’ Substance Use Disorder Compliance Division, said her agency, can only do what the state Legislature allows them to.  “We’re not going to quantify our functions,” Perez said. “Our role is to provide oversight. That is, once again, exercise the authority that we have.”Health department spokesperson Carol Sloan said state codes list specific causes for denying a treatment center license.  Applications generally aren’t screened by the state.  Drug counselors are certified by industry-related agencies to work in recovery programs, and once they’re certified, they’re governed by a code of conduct written by the certifying agency that could make them subject to discipline for certain crimes, such as sexual misconduct or drug abuse.Officials say neither the third-party certification organizations, nor the state health services agency, are routinely notified when treatment center operators or their workers are convicted of crimes or disciplined for license violations.  California legislators have fought back for years, fearful that an increase in restrictions will raise treatment costs or limit the number of rehab beds.“There is significant resistance…to looking at a (rehab operator’s) background,” State Sen. Pat Bates, R-Laguna Niguel, said. “There’s a culture about giving these people a second chance.”Still, she feels background checks and stricter licensing requirements are vital. “It’s something we need to pursue.”Since they were charged in May, the Ganongs have shut down their recovery homes, according to an attorney, despite the fact that presently there are no regulations requiring them to do so.  Even if they are convicted and sentenced to prison, the Ganongs still could legally own sober living homes.William Ganong served as corporate secretary and a director of one of the drug testing labs and in 2006 and 2008, he pleaded guilty to two misdemeanors involving being under the influence of a controlled substance and driving under the influence.  This year, he faced a series of new misdemeanor charges originally filed in 2014 and 2015 for allegedly possessing an opium pipe, driving under the influence, speeding, and giving false information to an officer.Kate Corrigan, Philip Ganong’s attorney, indicated a key part of her client’s defense could be to cite the law itself.  “There was great effort to comply on his part,” Corrigan said. “But it’s not an area that has a good definition of what you can do and what you cannot do.”

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Bakersfield attorney Phil Ganong charged with fraud in $22 million urine test billing schemeHow a multi-million dollar empire built around urine drug tests exposes flaws in California’s rehab laws