3 Found Guilty of Participating in Scheme to Submit Millions of Dollars in Fraudulent Bills for Substance Abuse Treatment for Teens

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FILE PHOTO: Signage is seen at the United States Department of Justice headquarters in Washington, D.C.

          LOS ANGELES – A federal jury today convicted three defendants who participated in an $18.5 million scheme that submitted fraudulent claims to California’s Drug Medi-Cal program for alcohol and drug treatment services for high school and middle school students.

          With today’s guilty verdicts, a total of 19 people have been convicted of federal criminal charges stemming from fraudulent bills submitted by a Long Beach company – the non-profit Atlantic Recovery Services (ARS), later called Atlantic Health Services – that provided substance use disorder treatment services to students at local high schools and middle schools through Medi-Cal and its Drug Medi-Cal program.

          The three defendants convicted today of health care fraud charges are:

  • Gregory Hearns, 66, of Compton, the billing supervisor for ARS who compiled the monthly billing and arranged for its submission to Medi-Cal (guilty of one count and acquitted on 10 others);
  • LaLonnie Egans, 64, of Bellflower, a former manager at ARS (guilty of three counts);
  • Tina Lynn St. Julian, 58, of Inglewood, a former counselor at ARS (guilty of four counts).

United States District Judge Philip S. Gutierrez is scheduled to sentence all three defendants on July 15, at which time each will face up to 10 years in prison for each count of conviction.

          According to court documents and the evidence presented at a 12-day trial, the participants in the ARS scheme defrauded the Drug Medi-Cal program by submitting bills for services to students who did not medically need alcohol or drug treatment. ARS also billed Drug Medi-Cal for group and individual counseling sessions that were not provided or did not meet the requirements for reimbursement as to size, length, or setting. To support the false billings, ARS employees falsified numerous documents.

          The former president and chief executive officer of ARS – Richard Mark Ciampa, 68, of Commerce – pleaded guilty last year and was sentenced in September to seven years in federal prison.

          In March 2009, Drug Medi-Cal ordered ARS to repay an overpayment, which caused a significant amount of financial pressure on Ciampa and ARS. Ciampa, in turn, passed along this financial pressure to his employees and threatened the employees that they would lose their jobs with ARS or have their hours reduced to part-time if they did not generate significant billings. In response to Ciampa’s threats, ARS employees generated false and fraudulent claims for submission to Drug Medi-Cal.

          Hearns also pressured ARS employees to increase billings. The pressure from ARS management prompted Egans and St. Julian to commit specific actions, including enrolling students in ARS’s substance abuse treatment program even if the students had used drugs or alcohol only one time or just occasionally, exaggerating documentation to falsely show that enrolled students had a medically diagnosed substance use disorder, falsifying documents to make it look like group and individual counseling sessions had taken place, collecting student signatures on sign-in sheets for group counseling sessions that the students did not attend or that were not conducted, and forging signatures on sign-in sheets and other documents that were used to support claims for reimbursement.

         During the four-year period that ended in March 2013, ARS submitted false and fraudulent claims of just over $18.5 million, and Drug Medi-Cal paid approximately $17,635,100 on those claims.


          The California Department of Justice, Division of Medi-Cal Fraud and Elder Abuse; the United States Department of Health and Human Services, Office of Inspector General; and the Internal Revenue Service – Criminal Investigation investigated this matter.

          Assistant United States Attorneys Cathy J. Ostiller and Karen E. Escalante of the Major Frauds Section, and Assistant United States Attorney Nisha Chandran of the General Crimes Section are prosecuting this case.