Feb. 8 (Bloomberg) -- After Jennifer Vanlieu turned to methadone treatment to beat an addiction to heroin and pain pills, she morphed from drug user to convicted drug dealer.
Vanlieu said she got a carryout methadone dose at a clinic operated by CRC Health Corp. in Richmond, Indiana, in March, 2010, and then gave about 15 milligrams to her friend Carissa Plemons. Plemons died hours later, after ingesting a lethal mix of methadone and other drugs, according to police reports.
Take-home methadone -- doses patients carry out instead of taking at clinics -- enabled the abuse, said Vanlieu, 26, who was sentenced to six years in prison for dealing the drug to Plemons. While she didn’t sell it to her friend, she said in an interview that other clinic patients often resold their take-homes. CRC is owned by Boston-based Bain Capital Partners LLC and is the largest U.S. provider of methadone treatment.
“Some would sell it in the parking lot,” she said.
Liquid methadone, used for decades to help addicts abate withdrawal symptoms as they quit heroin or other opiates, is leaking into illegal street sales via take-home doses, according to law-enforcement officials in Indiana, Kentucky, Virginia and West Virginia. Investigators in each of those states have linked such “diverted” doses to clinics operated by CRC.
Some former employees say the company, which operated 57 clinics in 15 states last year, works to maintain high enrollments despite chronic understaffing, increasing both CRC’s profitability and the chance that its take-home methadone doses will be abused.
“That was the culture -- keep the census up,” said Mike Liaudaitis, who worked as a counselor at CRC’s clinic in Goldsboro, North Carolina, from mid-2009 until early 2011. He recalls being swamped with a 64-person caseload that exceeded the state’s limit of 50. Counseling suffered as a result, he said. “We had no choice but to buy into it to keep our jobs.”
Cupertino, California-based CRC, which also operates in-patient treatment centers, youth programs and weight-management services, doesn’t put profits ahead of patients, said Chief Executive Officer R. Andrew Eckert, in a statement issued in September. He defended carryout dosing, which can help keep patients on methadone and off illegal drugs, by easing the inconvenience of having to visit a clinic daily.
“Our mission is to help these individuals, but sadly, we cannot report 100 percent success,” Eckert said. “No treatment provider can.”
While any health-care company encounters “instances of chance that are regretful and unfortunate,” there are “hundreds of thousands of clients our facilities have successfully treated since our founding in 1995,” said Kristen Hayes, a company spokeswoman, in an e-mail. CRC has experts who visit each clinic to maintain quality and guide improvements in counseling and other areas “unlike any other provider in the business,” she said.
In states where CRC has had its highest patient counts -- Indiana, West Virginia, California and Oregon -- available data and interviews show the company tries to provide take-home packages, which range from one dose to as many as 30, more often than other clinics.
“Clearly the company is saving money if they’re distributing multiple take-home doses at one time,” said West Virginia Delegate Don Perdue, a Democrat who has pursued stricter oversight of for-profit clinics. “They don’t have to have as many staff handing out the merchandise.”
In the small towns where CRC has clinics, its methadone has surfaced in criminal cases, police and prosecutors say. Dearborn County, Indiana, officials are planning a $10 million expansion to the local jail, needed partly because of crimes tied to CRC’s clinic in Lawrenceburg, said prosecutor F. Aaron Negangard.
“We’ve had people come down to the methadone clinic and rob a bank because they need money to pay for methadone,” he said. “We’ve had people at the McDonald’s shooting up. Whether it’s dealing or someone giving take-homes to a friend, it’s been a huge problem.”
In Kentucky, officers who raided a Kenton County house found a “moonshine jar” containing about a quart of liquid methadone, said Rob Sanders, the state prosecutor in Covington. Two residents of the house, both patients at the Lawrenceburg clinic, “were collecting methadone and selling it,” he said.
In Virginia, 3-year-old Trevor Hylton died on Sept. 30, 2009, after drinking methadone that his mother, Lisa Michelle Hylton, said she left on a kitchen counter in a cough-syrup cup.
She later told authorities she got the dose from a drug dealer whose girlfriend was a patient at a CRC clinic, said K. Mike Fleenor Jr., the Pulaski County prosecutor. Police searched the alleged drug dealer’s home and found methadone bottles from CRC’s clinic in Galax, Virginia, Fleenor said.
Hylton, 41, is serving a 20-year prison sentence for second-degree murder and child neglect.
At least two dozen people have been charged with illegally diverting methadone from a CRC clinic in Cedar Bluff, Virginia, said Tazewell County prosecutor Dennis Lee.
“The potential for abuse is tremendous,” Lee said. “The potential for profit is also great. I’ve often said that if I were a smart businessman, I would have invested in methadone in the 1990s.”
Federal patient-confidentiality laws prevent CRC officials from discussing individual cases, said Philip Herschman, the company’s chief clinical officer, in an e-mailed statement. CRC follows “specific and rigid” state and federal rules in deciding which patients get carryout doses, he said. Safeguards include lockboxes and spot-checks, in which patients are called back to clinics to account for their take-home bottles, he said.
Carryout doses “are suspended immediately if the patient tests positive for any illicit substance,” Herschman said.
Not always, state regulatory records show. The Richmond, Indiana, clinic gave take-home methadone to a patient who flunked a drug test, a January 2012 audit found. The company’s Williamson, West Virginia, clinic didn’t immediately revoke take-homes from a patient who had two positive drug tests in 2010, records show. In 2011, inspectors found no evidence that a physician at CRC’s clinic in Renton, Washington, used “good clinical, judgment” in giving patients carryout doses.
A CRC center in Chattanooga, Tennessee, failed to supervise take-home doses properly in a case “clearly indicative of drug diversion,” state authorities found in June 2011. The company’s clinics in Claymont, Delaware, and Coatesville, Pennsylvania, were faulted in May 2012 and October 2010, respectively, for giving carry-outs to patients who missed required counseling, records show.
As for the spot-checks Herschman described -- they hardly ever happened at CRC’s clinic in Goldsboro, North Carolina, said Liaudaitis, the former counselor.
“I may have done one or two the whole time I was there,” he said. “I didn’t have time for that.”
That’s because the Goldsboro clinic -- like others described by regulators and former CRC employees in Indiana and West Virginia -- was frequently understaffed, Liaudaitis said.
Since Jan. 1, 2009, CRC’s clinics haven’t met staffing standards more than 50 times, regulatory records from 15 states show. Clinics were cited 80 times for failing to document that they gave patients enough counseling. In response, the company agreed to hire more, recruit more aggressively and increase supervision. Competition for qualified workers is intense, CRC said in its 2011 annual report.
CRC didn’t pay well enough to attract or keep experienced counselors, said Malaysia Williams, who worked at its clinic in Huntington, West Virginia, from June 2009 through March 2010. “Nobody stayed there,” she said. “It paid poorly.”
Williams got $13 an hour, she said -- about the same amount other former counselors reported. That’s roughly $27,000 a year.
High turnover meant large caseloads, Williams said. Her initial caseload was 120, she said; about a quarter of those files were in disarray. Patients’ positive drug screens -- which are supposed to result in their losing take-home privileges -- fell through the cracks for some counselors as they struggled to keep pace, she said.
“When you have that much of a backlog it’s impossible to be on top of all the stuff,” she said.
Until recently, there was little difference between the operations of for-profit and non-profit methadone clinics, said Thomas D’Aunno, a professor of health policy and management at Columbia University who has tracked the treatment centers for years. That changed in 2011 survey data, which showed “significant differences,” he said: For-profit clinics had fewer staffers than public clinics.
As Williams struggled to catch up in Huntington, the clinic pushed its revenue up almost 8 percent to $5 million in 2010 -- while expenses increased less than 1 percent to $2.6 million, according to state regulatory documents. That January, inspectors found that eight patients in a random sample of 13 hadn’t received the counseling they were supposed to. The company agreed to hire four full-time counselors and a supervisor, records show.
Inspectors reviewed six patients’ charts and found that three hadn’t met with a doctor in more than a year, according to the inspection report -- though annual medical screenings are required. Clinic managers pledged to add hours for a doctor and a physician’s assistant, according to the report.
A November 2010 inspection found that nine out of 10 patients hadn’t met with a doctor in more than a year. In March 2011, 16 out of 25 hadn’t. In September 2011, two out of five new patients hadn’t met with a doctor or physician’s assistant weekly, as required, based on the state’s review of clinic records.
CRC officials didn’t respond to questions about the Huntington clinic.
In methadone maintenance treatment, an almost 50-year-old field, drug addicts get daily doses of the synthetic narcotic. In appropriate amounts, it alleviates the symptoms of withdrawal from heroin or other opiates without getting users high. In combination with counseling, methadone can help addicts stay off illegal drugs and live with more stability, research shows.
Counseling is “the backbone of addiction treatment,” said Elinore F. McCance-Katz, a physician who has advised California state officials on treating opiate dependency. Without it, there’s a “good possibility” that patients won’t reduce or stop their drug use, she said.
Counselors are supposed to help addicts find the roots of their problem -- what led them to drugs and alcohol to begin with, said Tiffany Cordova, who worked at CRC’s Goldsboro, North Carolina, clinic in 2009 and 2010. She said her caseload was often too high to allow for enough counseling. In its absence, “all the methadone does is cover up the problem,” she said.
Nurtured by government spending, methadone clinics spread nationwide in the 1960s and ’70s until strapped state and local governments began decreasing their outlays. By 2010, for-profit providers controlled 52.8 percent of the 1,200 U.S. clinics.
Over the past seven years, private equity firms have invested more than $2.2 billion in substance-abuse treatment and behavioral health companies in 62 deals, according to PitchBook Data Inc., a Seattle-based research firm.
Addiction-treatment companies are “some of the most sought-after -- and valuable -- acquisition candidates in health care,” partly because of profit margins that can top 20 percent, according to the Braff Group, a Pittsburgh-based mergers and acquisitions advisory firm.
CRC reported EBITDA -- earnings before interest, taxes, depreciation and amortization -- of $24.9 million, or 21 percent of revenue, for the three months ended Sept. 30. Its recovery division, which includes the methadone clinics and other substance-abuse treatment facilities, reported an adjusted EBITDA margin, allowing for goodwill, stock-based compensation expense, management fees and other items, of 35 percent of revenue for the nine months ended Sept. 30.
Bain Capital, the private equity firm co-founded by former Republican presidential candidate Mitt Romney, paid $723 million for CRC in 2006, corporate filings show. Romney, who left Bain in 1999, had no input in its investments or management of companies after that, he has said.
Still, Romney reported last year that he owned more than $1 million worth of a Bain fund that holds most of CRC’s shares. He reported receiving between $100,000 and $1 million in dividends, interest and capital gains from that holding, as well as income from two other Bain funds with interests in CRC, according to the financial disclosure he filed with the U.S. Office of Government Ethics in June. Bain executives declined to comment, said Alex Stanton, a spokesman. Representatives for Romney didn’t respond to requests for comment.
CRC has reported paying Bain about $15.4 million in management fees along with $7.2 million in fees related to the merger since 2006. The company’s revenue more than doubled to $446 million in 2011 from $209 million in 2005. Methadone clinics generated more than a quarter of the 2011 revenue, $123 million.
About 80 percent of the clinics’ revenue in 2005 came from patients who typically paid in cash and upfront, CRC said in a 2006 disclosure. Doses in 2011 typically cost $13 to $14.50 a day, records from three states show, and the clinics serve about 26,800 clients, most of them treated with methadone, according to the company’s annual report.
Once they’ve helped addicts quit other drugs, for-profit clinics have a built-in incentive that may hurt their patients’ chances of ending their dependence on methadone, said Rod Bragg, assistant commissioner of Tennessee’s Department of Mental Health and Substance Abuse Services.
“With a nonprofit, the incentive is to get people to treatment and wean them off,” Bragg said. “When you have a for-profit and cash-only business, there is no incentive to detox them. In fact, there’s an incentive not to detox them because of the continual cash flow.”
CRC didn’t respond to a request for the number of its patients who have been successfully tapered off methadone. The company’s own study found that after one year of treatment, 89.8 percent of patients were free of any opiate other than methadone, Herschman said.
Columbia’s D’Aunno said it’s unrealistic to think large numbers of patients can eventually quit methadone; some need “a low blocking dose for the rest of their life.”
Virdie Channing Compton, 30, of Council, Virginia, was on methadone maintenance for more than four years at a CRC clinic in Cedar Bluff after opiate abuse that began in his teens, he said in an interview. After a year or two, he was shooting up his take-homes, he said, and abusing other drugs.
“I was strung out” worse than before, Compton said. He beat the clinic’s drug tests, he said, by sneaking in clean urine in a bottle tucked in his underwear.
On June 3, 2011, Compton had gotten his dose at the clinic and was driving through Council in an unlicensed farm truck when he veered into some oncoming motorcycles. He hit William Van Nortwick, a retired teacher from Safety Harbor, Florida, who was traveling with two sons and a friend on vacation.
Van Nortwick died. Tests showed Compton was under the influence of methadone and Alprazolam, an anti-anxiety drug. He pleaded guilty to involuntary manslaughter. He’s serving a nine-year prison sentence.
Reflecting on his methadone treatment, Compton called it “a joke.” “I did more drugs in that clinic than I’d ever done,” he said.
William Van Nortwick II, an engineer with Honeywell International, said CRC’s business practices contributed to his father’s death.
“These clinics may have started out designed to wean addicts off drugs,” he said. “But they’ve morphed into profit-making situations that don’t seem to have any checks and balances.”
Regulatory reports from 15 states show that CRC clinics received more than 1,000 deficiency citations since the beginning of 2009. None of the reports indicates that the company paid any fines.
Some states are more stringent than others. Ohio has banned for-profit methadone clinics for decades, after state mental-health advocates and leaders decided addiction care was “more in line with the mission of not-for-profit organizations,” said Stacey Frohnapfel-Hasson, a spokeswoman for the state Department of Alcohol and Drug Addiction Services.
That doesn’t keep CRC from treating Ohio addicts. The company’s East Indiana Treatment Center in Lawrenceburg, Indiana, saw 2,479 patients in 2011, state records show; only 380 of them were Indiana residents. Almost 45 percent, or 1,111 were from Ohio. Most of the others, 987, were from Kentucky.
Part of the reason for the inflow: Indiana’s rules on take-home doses are more lenient than those in Kentucky or Ohio, said Vidya Kora, a past president of the Indiana State Medical Association. Kora, a LaPorte County commissioner and former coroner, has called for turning all methadone clinic operations over to non-profit agencies.
While Indiana adopted legislation in 2008 aimed at mandating marijuana testing for methadone patients, creating a central registry of patients and decreasing the maximum number of take-home doses to 14 from 30, the rules are still less stringent than others, said state Senator Ron Grooms, a Republican whose southern Indiana district includes a CRC clinic in Jeffersonville.
In Indiana, CRC’s five clinics served 69 percent of methadone patients in 2011, while distributing 96 percent of the take-homes tracked by state records. Patients of CRC’s dozen California clinics received carryout packages of as many as 30 doses at a rate twice that of all others. In Virginia, 74 percent of patients at CRC’s three clinics got at least one take-home dose a week in August 2012, while 47 percent of patients at all other clinics did, state records show.
In Kansas and Louisiana, where CRC has one clinic apiece, the centers handed out fewer take-homes than others, based on state records. The remaining 10 states with CRC clinics couldn’t provide data.
The company’s seven West Virginia clinics, with about 4,100 patients, request more exceptions -- seeking carryout doses for patients who don’t meet basic criteria -- than the state’s two non-CRC clinics do, said Mary Aldred-Crouch, the state’s director of comprehensive community behavioral health program.
CRC’s clinics in Oregon, which have about 2,500 patients, and Washington, with 1,600, also request exceptions more frequently, based on state records. Of the states that were able to provide data on exceptions, only in Wisconsin are CRC clinics less likely than others to seek them, records show.
Experts agree that take-home dosing increases the chance that patients will avoid illegal drugs, said Mark Parrino, president of the American Association for the Treatment of Opioid Dependence. Its risks are small, he said.
Kevin Fouche, the former coroner of Wayne County, Indiana, disagrees. Fouche handled about a half dozen deaths involving take-home methadone, he said -- most often mixed with other drugs. He thinks the carryout doses should be banned.
In 2010, 4,577 people died of overdoses involving methadone -- down from 5,518 in 2007 yet almost six times the number in 1999, according to the federal Centers for Disease Control and Prevention. Overdose experts including CDC epidemiologist Leonard Paulozzi link the larger trend to an increase in methadone’s use as a painkiller; such prescriptions increased 672 percent from 1998 to 2006, the Government Accountability Office found.
Still, West Virginia law enforcement officers said in 2008 that drug-dealers were getting methadone from both pain prescriptions and clinic take-homes, “and it is likely that both are contributing to the high methadone overdose rate,” according to a report posted on the federal Drug Enforcement Administration’s website.
Jennifer Vanlieu had been attending the Richmond clinic for a couple months before she drove there on a Saturday with Carissa Plemons and another friend. She swallowed her regular dose, then carried out a blue vinyl bag containing a bottle of her “Sunday take-home.”
They drove to a gas station, where Vanlieu recalled giving gave Plemons “a little.”
“I was unaware she had other stuff in her system,” Vanlieu said. After midnight, Plemons’s boyfriend noticed she wasn’t breathing.
“She was cold blue,” Vanlieu recalled. “It hurt so bad I wanted to die.”
Vanlieu said she earned her GED in prison, which reduced her sentence, and she got out in December. Behind bars, she said, she quit drugs, “cold turkey.”
To contact the reporter on this story: Sydney P. Freedberg in Miami at email@example.com
To contact the editor responsible for this story: Gary Putka at firstname.lastname@example.org.