TRENTON – Aiming to crack down on fraud, corruption, and abuse in the state’s substance use treatment industry, the Senate Health, Human Services, and Senior Citizens Committee advanced two bills sponsored by Senator Joe Vitale, and Majority Leader M. Teresa Ruiz to better regulate the industry by increasing oversight on patient referrals, and banning deceptive marketing practices.
In February of 2024, the State Commission of Investigation (SCI) released a report, linked here, that found unchecked fraud, unethical conduct, and deception from businesses at every level of the recovery process. The SCI uncovered fraudulent billing, tax evasion, deceptive marketing practices, and other misconduct done in an effort to fund the lifestyles of executives and make more profit rather than aid their clients in overcoming substance use disorder.
“The SCI’s reported findings last February were disturbing, and as the state invests more dollars in the treatment of addiction we need to ensure that patients are actually being treated rather than used for profit,” said Senator Vitale (D-Middlesex), the Chair of the Senate Health, Human Services, and Senior Citizens Committee. “These bills will combat the corruption that was uncovered, prohibiting the referral of patients to specific facilities for personal profit and the deceptive marketing that is too-often utilized by the industry.”
“Treatment for substance use disorder is a lifeline for those grappling with addiction, and it is reprehensible that patients are being exploited in moments of vulnerability for nothing more than a quick buck,” said Majority Leader Ruiz (D-Essex/Hudson). “These practices too often put a roadblock on the path to sobriety for those who need help, and must be curbed if we are to effectively treat substance use disorder.”
S-3952, sponsored by Senator Vitale, would make it a crime of the third degree for a person to make or receive any payment or otherwise furnish or receive a fee, commission, or rebate in connection with the referral of payments to a substance use disorder treatment facility. The February SCI report had uncovered individuals receiving financial benefit for referring patients to specific facilities, which gave incentives for individuals to make referral decisions based on personal profit rather than the needs of the patient.
S-3955, sponsored by Senator Vitale and Majority Leader Ruiz, would prohibit the use of deceptive marketing practices by requiring treatment providers to include accurate and complete information on marketing materials on the types and methods of services provided, the location of services provided, and the treatment provider’s name and brand name. In addition, it would prohibit treatment providers providing false information as to their status as in in-network or out-of-network provider, false information as to their relationship with other providers, as well as other deceptive practices.
The bills were released in an 8-0, and 8-0 vote, respectively.