Change seemed imminent in January for patients of a troubled drug addiction program in Baltimore. State health regulators said they would be transferred to new treatment providers and moved out of squalid, drug-ridden and roach-infested apartments. Some patients hoped they would at last get the help they needed.
But little improved in the months that followed, some former patients of the program, PHA Healthcare, said in interviews.
Many patients said they had continued to live in the same buildings, operated by the same people. It was not always clear to them what company was providing counseling. But they attended sessions online, as they had before — sometimes led by the very same overseas counselors who had previously treated them and appeared to lack state licenses.
Drug use in the buildings remained common, said some of the patients, who declined to be identified for fear of retaliation, including possible eviction.
One woman described trying to stay off drugs while living with people who were using them, and attending online group counseling sessions that she said had provided little help. “By God’s grace I haven’t relapsed,” she said.
The state moved to suspend PHA Healthcare’s license to see patients shortly after The Baltimore Banner and The New York Times reported in December that the company had collected millions of dollars a year from Medicaid by offering free housing to people, many of them homeless, if they attended its outpatient group counseling sessions. Health officials described the practice as illegal but increasingly common in Maryland.
Because PHA Healthcare did not take government money directly for its housing, it avoided the state’s strict rules for regulated recovery facilities. Drug use was rampant in the buildings, interviews and records showed, and many patients relapsed.
Though overdoses and deaths happen on occasion in treatment programs, at least 13 people with connections to PHA Healthcare have died since 2022 — an unusually high number, according to providers. A 13-month-old boy starved to death after his mother died of cardiovascular disease; no one from the program had seen the mother for two weeks, according to a medical examiner’s report. (The state has not said that PHA Healthcare is responsible in any of the deaths.)
PHA Healthcare’s owner, Stephen Thomas, denied that patients were offered housing in exchange for attending counseling sessions. He said that any housing complaints were quickly addressed and that sessions were conducted by experienced interns from other countries with advanced degrees who were working to get licensed in Maryland.
In issuing a cease and desist in December, the state ordered PHA Healthcare to develop a transition plan to direct its patients to options for alternative treatment providers. Although they had no role in overseeing the housing, health officials also announced that Mr. Thomas had chosen to relocate patients from buildings run by PHA Healthcare.
What happened next was described in previously unreported state records and interviews with more than a dozen of PHA Healthcare’s former patients, six of whom continued to live in the company’s buildings after the license was suspended. Some detailed living conditions as recently as this month.
Mr. Thomas informed regulators within days of the announcement that he intended to continue providing housing. Instead of moving people out, patients said, those behind the housing rebranded some of the buildings as Ms. Ruby’s Place, named after Mr. Thomas’s mother, who is listed in corporate records for Ms. Ruby’s Place and played a role in PHA Healthcare, too.
Some patients were asked to leave, and some of the apartment complexes closed. But other patients said they had continued to receive free housing in exchange for logging on to Zoom meetings for group counseling sessions, using links provided by people who had previously worked for PHA Healthcare.
Mr. Thomas, through a spokeswoman, declined to answer questions about how he could continue to offer people free housing, given that the state had stopped paying PHA Healthcare for treatment services.
Some patients said they had been asked to sign documents allowing their medical records to be transferred without knowing where they were being sent. Others were told the names of their new programs, but were bewildered when, in some cases, their counselors remained the same.
In the months that followed, some patients said that members of the housing staff did check on them more often, and conducted drug tests with more regularity, though some said the program had not always acted on the results.
Since its announcement, the Maryland Department of Health has declined to answer most questions about PHA Healthcare, citing an ongoing investigation. State officials met with the company for more than two months about its transition plan, said Alyssa Lord, the deputy secretary for behavioral health, who oversees treatment programs in Maryland. “We are committed to the health and safety of Maryland residents,” she added.
Janet Conner-Knox, a spokeswoman for Mr. Thomas, did not answer questions about the company’s operations. “We have turned in our transition plan to the State of Maryland,” Ms. Conner-Knox wrote in an email. “They have gone through their process and approved those providers.”
For years, the state has struggled to oversee Maryland’s fast-growing and fraud-plagued addiction treatment field. Regulators failed to properly vet, audit and inspect programs, The Banner and The Times reported, even as Baltimore struggled to curtail the deadliest drug overdose crisis ever seen in a major U.S. city.
A Health Department spokesman said in April that the state office responsible for investigating complaints at thousands of treatment program sites had only four employees.
A copy of PHA Healthcare’s transition plan, obtained by The Banner through a public records request, shows that Mr. Thomas told the state he had spoken with three treatment providers who were ready to take the company’s roughly 200 counseling patients. The state signed off on those options.
It is not clear why Mr. Thomas selected those providers, or which ones took patients. But one former PHA Healthcare consultant, Kimberly Smith, had also worked for the three other providers. In an interview, she described herself as a “quality assurance” consultant.
Ms. Smith filed paperwork in 2023 to start a business with Mr. Thomas. And last year, Mr. Thomas signed a lease on a nearly $4,000-per-month apartment near the Inner Harbor for Ms. Smith to live in, court documents showed.
Ms. Smith said she had never started a business with Mr. Thomas, but consulted for PHA Healthcare, checking patient records and providing feedback until about 2022 or 2023, she said, when she was pushed out by those at the company who did not like her recommendations.
But she stayed in touch with Mr. Thomas and his mother, she said, who helped her with an apartment lease during some health challenges.
“I’m getting thrown into the picture, but all I did was shine some light,” Ms. Smith said.
Robin Warren-Dorsey, the owner of Journey Health Center, one of the companies listed on PHA Healthcare’s transition plan as an option for taking patients, said she had never heard of PHA Healthcare until Ms. Smith asked her to accept its patients and staff. Ms. Warren-Dorsey said there was no financial arrangement between Journey Health Center and PHA Healthcare.
Ms. Warren-Dorsey said her program took 30 of PHA Healthcare’s patients in late January and hired four of its employees, including three counselors, because she wanted a “seamless transition.” All of the patients and all but one of the employees have since left her program, she said.
“Here I am trying to help people,” Ms. Warren-Dorsey said, adding, “I’ve done nothing wrong.”
Ms. Smith acknowledged working with the companies listed on the plan, including Journey Health Center, but said she had worked with many drug treatment programs in Baltimore and denied playing a role in referring PHA Healthcare’s patients to any of them.
James Scott III, the owner of Holistic Change, said he did not know why it had been listed on PHA Healthcare’s transition plan. In April, he told The Banner he had only recently learned that patients were looking for a new place to go.
Ms. Smith, who until recently consulted for Holistic Change, said no patients from PHA Healthcare ultimately enrolled there.
Pamela Dukes, the owner of I’m Still Standing By Grace, the third company listed on the transition plan, declined to comment for this article.
Ms. Dukes had a business relationship with PHA Healthcare before the license suspension; as recently as last year, the methadone clinic she also owns, By Grace, dropped off doses of medication at PHA Healthcare’s apartments, former PHA Healthcare employees said. Ms. Smith said she had worked at By Grace as a counselor.
In 2016, Maryland’s inspector general found I’m Still Standing By Grace had improperly billed Medicaid for more than $116,000, and referred the case to the state attorney general’s office. The company continued to bill Medicaid for a patient for months after he had left for another treatment program, according to the inspector general’s report. The patient also said Ms. Dukes had used his SNAP benefits to buy food for the “house,” forced patients to attend the same church she attended and coached them on what not to say to state regulators, according to the report.
A spokeswoman for the office of Anthony Brown, Maryland’s attorney general, said it had closed a case against I’m Still Standing By Grace after a “thorough investigation,” but declined to provide additional details.
The Health Department declined to answer questions about whether it was aware of the investigation. Typically, it will vet a transition plan by looking into a variety of factors, which could include a program’s location, capacity and history of complaints, said Ms. Lord, who oversees treatment programs in Maryland.
Ultimately it is up to patients to choose where and how they receive treatment, she added.
Alarmed by the explosive growth of providers and complaints about unscrupulous practices, officials began cracking down on Medicaid fraud last year. The Health Department is drafting new regulations and scrutinizing applicants more carefully, Ms. Lord said. It has referred more than 100 providers for investigation by state authorities, she added.
After The Banner and The Times published its initial investigation, Maryland lawmakers called for the state to do more.
State delegate Sandy Rosenberg, a Baltimore Democrat, sponsored a new law requiring health officials to report their efforts to improve oversight of drug treatment programs. He said “the state needs to be aggressive.”
Clarence Lam, a state senator and physician who teaches at the Johns Hopkins Bloomberg School of Public Health, said health officials took too long to heed warning signs.
“The state is still falling short,” Mr. Lam said. “Unless somebody is particularly vigilant in staying on top of entities like PHA, this game of Whac-a-Mole could very well continue for a while because they have figured out how to skirt a lot of the regulations and protections.”
Spencer Gear, who until he retired in December oversaw licensing and compliance for behavioral health programs at the Health Department, said the problems were deep and systemic.
“Until the state upgrades its regulations to set clearly enforceable standards, staffs its licensing and compliance units adequately, and takes legal action against chronic offenders, the system will remain excessively vulnerable to fraud and unethical practice,” Mr. Gear said.
Justin Fenton and Dylan Segelbaum contributed reporting. Kirsten Noyes contributed research.
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