In one of the many quiet subdivisions of Tucson’s far east side, a certain home started causing consternation around Halloween.
A series of people, apparently unhoused and unrelated, began living there, neighbor Karen Gregory and others noticed. Things quickly went downhill.
“They were dealing drugs. There was trash on the street. Mattresses in the alley,” she said. “People would come up to the front yard, turn on the hose, take a bath, put their clothes back on and leave.”
It was way out of character for this cul-de-sac. When she asked, Gregory said, she was told that it was a “sober living home.”
This phrase should ring a bell if you’ve been following Arizona news lately. In May, Gov. Katie Hobbs and Attorney General Kris Mayes announced a crackdown on fraudulent billing by sober living homes.
They focused on the most outrageous activities of this blossoming business. The operators of these homes, purportedly transitional housing for people overcoming addictions, had apparently rousted Native Americans from the streets, registered them as residents and started billing the state’s Medicaid program for them.
At the time, the reimbursement for outpatient treatment of tribal members was astronomical, up to $1,300 per day. But part of the scheme, Mayes said, was that they often didn’t even provide services to the clients. In other cases, the operators didn’t even have real clients — they just bought lists of people with identifying info and claimed them as residents receiving services.
In fiscal year 2019, the state’s Medicaid program paid $53.9 million for this sort of outpatient behavioral health service. Just three years later, Medicaid paid out $668 million for the same category of services.
“It’s not just Phoenix,” Mayes told me Friday. “It’s happening in Tucson and Pima County.”
She said investigators have found at least 10 homes operating fraudulently in the Tucson area. But the problem isn’t just about Native Americans.
“You have people being lured across demographic categories to these facilities,” she said. “You also have a lot of ghost billing going on.”
Unwelcome neighbors
Not every sober living home is a scam — they serve a legitimate purpose of helping people in the process of recovery, often after leaving an inpatient program. And some homes that are known by that phrase don’t actually fit under that category under the state’s licensing scheme.
Under state law, sober living homes don’t offer medical care. As the Arizona Department of Health Services explains, they provide “a supervised setting to a group of unrelated individuals who are recovering from substance use disorders, and may provide activities that are directed primarily toward recovery from substance use disorders.”
When discussing the fraud involving sober living homes, Mayes was also making reference to a separate category, “behavioral health residential facilities.” These are different under state law in that they must provide behavioral health services onsite.
The difference often goes unnoticed. On Friday I stopped by a handful of east-side homes that neighbors had flagged as possible sober-living homes, including one just southwest of Broadway and Houghton Road. When I knocked on the door, a person inside acknowledged it was a “sober living home.”
Later, though, the owner of the home called me, and scoffed at that categorization. It’s a behavioral health residential facility, he said. He told me the facility just started operating recently, and it gets clients from reputed local behavioral-health agencies such as COPE and La Frontera.
Neighbors of this home, about a mile from the one that Karen Gregory described, were also unhappy with it. They told me people gather outside and smoke, talk loudly during the night and move in and out of the home frequently. It’s odd and unwelcome on a residential street.
‘A major flaw in accountability’
But in truth, the complaints around this house were not too severe. They raise the question of what residents should be willing to tolerate as the city and country grapple with an addiction epidemic.
We need places where people can go and be in supportive housing with others in recovery. It’s not always going to be comfortable.
“There are legitimate licensed behavioral health facilities and substance abuse facilities,” Mayes said. “We have a list of what we consider good actors. They’re out there, and we need them to be out there. One of the reasons we need to shut down the bad actors is we need the good guys to flourish.”
One of the issues in sorting out which home is what type, whether they’re licensed and if they’re doing things right comes from state law. ARS 36-2066 requires homes to provide the health department with a phone number and website listing, but it prohibits the health department from disclosing the address of these homes.
Will Humble, the former state health director and executive director of the Arizona Public Health Association, said keeping addresses secret can protect bad operators.
“One of the main things that makes a licensing system work is complaints about facilities,” he said. “That part of it is a major flaw in accountability. The public is part of what keeps the system accountable. If it’s secret they can’t do that.”
More oversight possible
That law only applies to the state health department, though, and several Arizona cities have passed their own ordinances requiring sober living homes and similar facilities to get licensed. Phoenix passed its ordinance in 2018 amid a wave of concern and similar ordinances.
Tucson, though, has nothing like it. City Council Member Paul Cunningham, who represents the east side neighborhoods where these homes are located, met with Gregory, other residents and Tucson police recently to discuss the new sober homes in the area.
Cunningham, who himself has gone through a substance-abuse recovery process, said he sees the need for good sober homes, but there is apparently not enough oversight or information available. He’s planning to put a discussion of sober living homes on an upcoming study session.
An ordinance that at minimum requires home operators to inform the city where they are would seem like an easy start. That way there will be pressure to operate right, or face consequences, from the get-go. Requiring some amount of separation between homes also seems sensible.
Gregory eventually became fed up with the home on her street and complained to the state health department and to city code enforcement in early March.
March 27, a city inspector reported “no interior violations, found 4 shopping carts and 2 mattresses in the alley behind the property, requested special B&B pick up, found no C of O (certificate of occupancy) or state approvals to run this type of group home at this moment, sent notice of violation to the owner.”
The place was empty by mid-April. When I knocked on the door Friday, nobody answered, and there was nothing unusual about the place.
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