DMHC Intervenes In Rehab Treatment Referral Scheme

The Department of Managed Health Care has taken the unusual step of ordering an Orange County man to stop soliciting health insurance due to his lack of license and alleged engagement in deceptive business practices that led to Blue Shield of California paying out more than $1.2 million for substance abuse treatment claims.

            The agency mostly focuses its enforcement actions against insurers, although it occasionally takes steps to rein in insurance agents. But this appears to be the first case in which the DMHC has taken action against an unlicensed solicitor.

            According to the Sept. 19 order, Reuben “Benji” Grajeda used solicitations through social media to enroll approximately 180 individuals into health plans operated by the San Francisco-based Blue Shield between May and November 2014, although Blue Shield officials say as many as 219 enrollments occurred. According to the DMHC, Grajeda has multiple felony convictions for possessing, selling and transporting methamphetamine.

The solicitation was indirectly connected to Grajeda’s former  job as a utilization review manager with Statim LLC in Brea, which provides billing services for substance abuse treatment centers.

According to the DMHC, Grajeda used billing information from one of Statim’s clients, Serenity Shores Treatment Center in Costa Mesa, to identify and solicit individuals through Facebook. He was assisted with social media posts by an individual described by the DMHC as an advocate in the treatment community whom Payers & Providers has identified as Jodi Barber, a resident of Laguna Niguel who advocates against prescription drug abuse. Grajeda offered to enroll individuals who contacted him in plans offered by Blue Shield and stated directly in social media posts the insurer would pay for substance abuse treatment.

“Grajeda is one example of a serious issue Blue Shield of California and many other health plans are facing: Third parties with a financial interest enrolling and paying premiums for members,” said Blue Shield spokesperson Steve Shivinsky. He added that Grajeda was discovered after the health plan launched an internal investigation after claims related to substance abuse spiked.

According to the DMHC, Grajeda’s enrollment process allegedly involved him posing as the applicant on the Covered California portal, encouraging applicants to use false addresses, and having the applicants -- several of whom were already enrolled in Medi-Cal -- to falsely state their incomes in order to qualify for commercial coverage. Grajeda also often used his cellphone number as the applicant’s home phone number. Blue Shield claimed that Grajeda often paid the initial premiums for the enrollee as well, although subsequent payments were rarely made at all.

After they were enrolled, Grajeda allegedly referred some 20 individuals to treatment centers operated by the parent company of Serenity Shores, of which 18 received care. Grajeda was paid more than $29,000 by Serenity Shores’ parent company in what were described as commissions. According to the DMHC, the payments were based on 20% of what was collected from Blue Shield by Serenity Shores for treatments rendered. Blue Shield said total claims filed via those enrolled by Grajeda totaled $12.9 million, although the DMHC said the plan paid out about 10% of that amount.

According to Blue Shield, another case of inappropriate billing by a substance abuse treatment center led to $60 million in filed claims, most of which were eventually rejected.

“It would be against the public interest to allow (Grajeda) to act as a solicitor in the state of California in that (his) conduct is deceptive and demonstrates a lack of integrity, truthfulness, and honesty in his interaction with the plans and the public,” the DMHC concluded. A spokesperson said Grajeda’s case has been referred to the appropriate law enforcement agencies.

Serenity Shores has had its share of controversies. Its owner, Carrie Heckel, pled guilty last year to a misdemeanor charge for having 18 clients residing in a private residence in Costa Mesa -- 11 more than the legal limit. Also last year, a former intake worker at Serenity Shores was convicted of murder after hitting a bicyclist with a car while high on heroin.

            Grajeda, Barber, Heckel and officials at Statim did not respond to requests seeking comment.    

Barber, reached through her website, said that Grajeda never informed her he lacked a license to sell insurance. “Is he still doing that?” she asked.