[co-author: Stephanie Kozol]*
On May 8, the Superior Court of Arizona in Maricopa County ordered a health care company to pay more than $30 million in restitution to the Arizona Health Care Cost Containment System (AHCCCS) due to the company’s alleged fraudulent billing practices. The underlying criminal convictions and the resulting restitution order reflect a broader trend among state attorneys general (AG), who are taking a more active role in prosecuting and pursuing various forms of health care fraud.
What Happened?
In 2021, following a joint investigation with the Office of the Inspector General for the U.S. Department of Health and Human Services and the AHCCCS Office of Inspector General, the Arizona AG’s Healthcare Fraud and Abuse Section indicted L&L Investments, LLC on various felony charges, including conspiracy, illegal control of an enterprise, theft, and fraudulent schemes and artifice. While many other entities and individuals were named in the initial indictment, all reached plea deals — except for L&L investments, which opted for a trial by jury.
At its core, the criminal indictment against L&L Investments alleged that the company submitted fraudulent billing for behavioral health services. The indictment also alleged that L&L Investments acted as an agent of other fraudulent billers and bad actors, including by acting as a “consultant” for these bad actors by handling administrative billing-related matters. The Arizona AG alleged that L&L Investments’ “consultant” services were, in reality, an effort to franchise its fraudulent scheme.
At trial, the AG presented evidence indicating that L&L Investments recruited vulnerable individuals under the guise of providing behavioral health services, but ultimately failed to provide any such services and instead submitted fraudulent bills for the services. The AG also presented evidence that L&L Investments billed for behavioral health services that could not have been rendered, including services provided to children, individuals who were dead, or individuals who were incarcerated. The AG’s evidence showed that L&L Investments’ alleged scheme targeted Arizona’s Native American population.
In May 2024, a Maricopa County jury found L&L Investments guilty of various felonies after only three hours of deliberations. At sentencing, which took place in August 2024, L&L Investments was ordered to pay a $4 million fine and placed on probation for seven years. However, the court deferred decision on the appropriate restitution amount until May 2025.
In its May 8 decision, the Superior Court of Arizona in Maricopa County, ordered L&L Investments to pay $30,236,207.52 in restitution to AHCCCS.
Why It Matters
The indictment, conviction, and restitution order against L&L Investments raise several important considerations for the health care industry. First, the prosecution of L&L Investments and resulting restitution order demonstrate that health care providers should implement systems and protocols that discourage and prohibit the submission of fraudulent bills. Second, the prosecution of L&L Investments demonstrates that a state agency’s failure to recognize or reject fraudulent bills will not serve as a defense against a later prosecution. Third, the prosecution of L&L Investments demonstrates that state AGs have begun to take a more active role in prosecuting fraudulent health care activity. Finally, it bears noting that L&L Investments’ scheme had profound political and social implications in the state of Arizona, which underscores the strategic need for any party targeted by a state investigation or indictment to understand the political context of the prosecution, which necessarily informs any defense.
*Senior Government Relations Manager
