The former owner of an Austintown recovery clinic, along with five others, is now facing federal charges of an alleged health care fraud conspiracy. 

Ryan Sheridan, 38, was arrested Thursday afternoon and remains in custody pending a detention hearing February 12.

The owner of the former Braking Point Recovery Center is accused of billing Medicaid $48 million for drug and alcohol recovery services not provided, not medically necessary, lacked proper documentation, or had other issues that made them ineligible for reimbursement.

"At a time when people desperately need help to combat their addiction here was somebody who was taking advantage of that," said U.S. Attorney's Office spokesman Mike Tobin.

"These defendants are accused of profiting off of it by not providing the services that they were billing Medicaid and indirectly the taxpayers for," Tobin said.

Named in the 60-count indictment unsealed in U.S. District Court in Cleveland are:

  • Ryan P. Sheridan, 38, of Leetonia - owner of Braking Point
  • Jennifer M. Sheridan, 40, of Austintown - Sheridan's ex-wife and Medical Records and Billing Coordinator
  • Kortney L. Gherardi, 29, of Girard - Program Director for Braking Point Austintown
  • Lisa M. Pertee, 50, of Sunbury - Director of Operations for Braking Point in Whitehall, OH
  • Thomas Bailey, 44, of Poland - Medical Director for Braking Point's detox centers in Austintown
  • Arthur H. Smith, 54, of Austintown - Medical Director for Braking Point Austintown

All six charged with conspiracy to commit health care fraud related to their work at Braking Point Recovery Center, which operated drug and alcohol rehabilitation facilities in Austintown and Whitehall, Ohio.

Additional counts include health care fraud, money laundering, operating a drug premises, conspiracy to distribute controlled substances, use of a registration number issued to another to obtain controlled substances, and other offenses.

According to the indictment, Ryan Sheridan was the sole owner of Braking Point Recovery Center, which operated drug and alcohol rehabilitation centers in Austintown and Whitehall, Ohio, that provided detox, intensive outpatient treatment, day treatment, and residential living rehabilitation.

Sheridan also owned and operated numerous other businesses, including Braking Point Health and Fitness LLC and Braking Point Recovery Housing LLC, which owned recovery houses (or "sober houses") for individuals attempting to maintain abstinence from drugs and alcohol.

Also, Sheridan was known as a developer of downtown Youngstown. 

As part of being a certified provider, Sheridan allegedly agreed to follow the rules and regulations of the Ohio Medicaid Program and the Ohio Department of Mental Health and Addiction Services.

Between January 2015 and October 18, 2017, the indictment said various defendants submitted or caused to be submitted billings to Medicaid for drug and alcohol services that were: coded to reflect a service more costly than was actually provided; without proper documentation; without proper assessment documents containing valid diagnosis; billings for patients whose records did not contain diagnosis by a physician; related to treatment at unlicensed inpatient beds; billings related to Bailey dispensing of Suboxone even though Bailey did not have the authority to do so; for case management services when, in fact, the clients were working out at Sheridan's gym; billings based on quotas provided to the nurses by the defendants to bill four to five hours of treatment daily, even if the services were not medically necessary; billing for in-patient detox and drug treatment services that were, in fact, provided in an out-patient setting, among other violations.

In December 2016 the Ohio Medicaid Fraud Unit, the IRS, and other federal agencies opened a hotline based on complaints from former Braking Point employees and the high volume of Medicaid reimbursements to the company.

From May 2015 to October 2017, Medicaid paid Braking Point more than $31 million on 134,744 claims, according to a previously filed complaint.

The complaint said Braking Point's health insurance billing was done by Jennifer Sheridan. 

During a June 14, 2017 site survey in Austintown, inspectors from the Ohio Department of Mental Health & Addiction Services say they found many case management notes did not have a credential supervisor signing off on the notes.

The complaint says some of the case management were for "questionable" treatment, including working out at a gym and a counselor buying a patient's cigarettes.

"The assessments of patients were not completed properly, and goal were very generic," according to the complaint.

Also, "Crisis intervention notes written into the charts were for issues that do not qualify as crisis," the complaint continued.

One case review found that Braking Point received nearly $35,000 for one patient's treatment, 28 days of which included treatment in beds that weren't licensed.

The government says Braking Point operated as a residential facility without proper licensing, and should not have been reimbursed by Medicaid.

As part of the investigation, authorities say they interviewed 13 employees, one of whom described the billing at Braking Point as "secretive," adding that the file room was in disarray with incomplete files.

Counselors would run five group sessions a day and be said to be behind on their billing notes because of the volume of patients, according to an employee who was interviewed by investigators.

Another employee told investigators that there was no training for employees and no drug screening or criminal background checks were required.

Investigators interviewed another employee who said that Sheridan expected to make $100,000 a week and would "scream" at his ex-wife if Braking Point only made $50,000.

One employee, who questioned how narcotics were dispensed, told investigators that Sheridan said they shouldn't worry about it.

The court filing claims Braking Point submitted approximately 134,744 claims to Medicaid for more than $48.5 million in services it claimed to provide between May 2015 and October 2017. The claims caused Medicaid to pay Braking Point more than $31 million. Medicaid suspended payments to Braking Point on October 18, 2017.

The Sheridans, Gherardi, Bailey, and Smith are accused of conspiring to develop a standard protocol of distributing the same amount of Suboxone to every patient seeking drug treatment immediately upon entering Braking Point's detox program without being evaluated by a duly licensed physician to determine the medical necessity for the use of Suboxone.

The Sheridans, Gherardi, and Bailey allegedly used Smith's DEA data waiver license to dispense more than 3,000 doses of Suboxone in 2017 alone without Smith having seen the patients. Smith allegedly held himself out to be Braking Point's medical director but only went to Braking Point approximately twice a month.

Ryan Sheridan is also accused of making numerous financial transactions involving money derived from unlawful activities, including health care fraud and conspiracy to commit health care fraud.

Prosecutors are also seeking for forfeit property and proceeds obtained as a result of these crimes, including nearly $3 million, property in Columbiana, Mahoning and Trumbull counties, and eight automobiles, including replicas of vehicles used in the movies "Back to the Future," "Ghostbusters" and "Batman."

"These defendants are accused of stealing tens of millions of dollars from taxpayers through fraudulent billing and other crimes," U.S. Attorney Justin Herdman said. "Treatment for people struggling with drug and alcohol addiction is vitally important, but these defendants profited off the suffering of others. We will hold accountable anyone who tries to illegally take advantage of the drug epidemic."

"Individuals who are recovering from opioid and alcohol abuse that seek assistance need to have the utmost confidence and trust in those who are providing their care," said Lamont Pugh III, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region.  "That trust and confidence was violated by these defendants in order to pursue their own financial gain and waste vital taxpayer dollars. The OIG will continue to work with our federal, state and local partners to ensure that those who commit criminal acts to unjustly enrich themselves are held accountable."

"While patients from the community were receiving treatment for their addictions, these individuals were allegedly engaged in fraudulent billing and other financial schemes to bilk taxpayers out of millions of dollars," said FBI Special Agent in Charge Eric B. Smith. "The FBI will continue to work with our law enforcement partners and healthcare industry to identify those illegally cheating the system for the benefit of their own pockets."

"The conduct detailed in this indictment is egregious and exposed these defendants for who they really are, thieves. They defrauded the health care system for their own personal gain," said Ryan Korner, Special Agent in Charge, IRS-Criminal Investigation, Cincinnati Field Office. "IRS-CI is committed to collaboratively working to unravel complex fraud and money laundering schemes and ensuring those responsible are deprived of the fruits of these crimes."

"While the vast majority of the healthcare professionals in this country are committed to saving lives, there are a few who are merely drug dealers hiding in plain view, and driven by greed," said DEA Special Agent in Charge Timothy J. Plancon. "These arrests reiterate the Drug Enforcement Administration's commitment to making our communities safer from illicit drugs, diverted pharmaceuticals, and fraud."

"These scams are a sucker punch in the face to every family with loved ones struggling with addiction," Ohio Attorney General Dave Yost said.  "We will work with our partners to achieve justice — and get our money back."