Lawmakers fail to address sober living home scandal

What several state officials have called one of the biggest scandals in Arizona’s history went unaddressed by the Legislature this year.

There were several bills filed in the legislative session that proposed regulating sober living homes, which state officials have sought following numerous cases of fraud in sober living homes that have victimized Native American residents.

The bill that made it the furthest in 2024 was Senate Bill 1361, sponsored by Sen. Frank Carroll, R-Sun City West. The measure would have modified requirements of the Department of Health Services’ licensing, oversight and regulation of sober living homes, including mandatory DHS or third-party inspections to verify compliance with regulations.

But some members of the Legislature felt like the bill didn’t go far enough and the members who did support it said the measure only takes small steps in addressing the sober living homes scandal.

“We decided to take small steps in making changes to the sober living home bill. We had all come to an agreement that no matter what bill would come before us, we would work together, we would try to make those strides to improve it,” Rep. Myron Tsosie, D-Chinle, said.

Last year, the Arizona Health Care Cost Containment System suspended payments to more than 100 care providers suspected of fraud by recruiting Native Americans to enter their facilities and then bill for treatment that was never provided.

The issue has gained attention from state officials in recent years. Many residents testified at a 2022 House Ad Hoc Committee on Missing and Murdered Indigenous Peoples and shared experiences of their families suffering from fraudulent practices in sober living facilities.

State officials have estimated that thousands of Native Americans have suffered from the fraudulent sober living home scandal while costing hundreds of millions in Medicaid funding.

“The sober living homes scandal was one of the greatest black marks that will go down in Arizona history as one of the worst, shameful things that has ever happened, ever,” said .

Parker and some other Republicans in the House voted against Carroll’s bill. She said she was passionate about fixing the sober living homes issue and said the Legislature needed to go back to the drawing board with all stakeholders.

“It’s better not to have worse legislation on this issue,” Parker said.

In March, the House Health and Human Services Committee killed a competing sober living homes bill from Sen. Theresa Hatathlie, D-Coal Mine Canyon. Two members of the committee, Reps. Selina Bliss, R-Prescott; and Sarah Liguori, D-Phoenix, said Hatathlie’s SB1655 was too broad and would have negative consequences on medical professionals, sober living homes and behavioral health centers that operate in good faith.

SB1655 would have increased penalties for wrongful sober living home practices up to a daily $10,000 maximum fine for unlicensed facilities. It also increased regulations to operate a facility, including notifying a patient’s family they’ve been admitted into a facility, employee fingerprinting and more stringent licensing requirements.

House members also said they were expecting amendments to SB1655 from the Senate, but the amendments weren’t present at the time of the Health Committee’s vote.

While Carroll’s bill increased penalties for sober living homes that are out of compliance with the law, it didn’t propose penalties as heavy as SB1655. It also prescribed inspection practices for the DHS and contained fingerprinting requirements for staff members.

On May 13, Sen. Catherine Miranda, D-Laveen, read a statement on behalf of Hatathlie on the Senate floor, sharing that Hatathlie’s niece died in a sober living home.

“The circumstances surrounding her death should force us to confront the uncomfortable truths about the inadequacies and negligence that plague many sober living facilities. They should force us to seriously listen to leaders such as myself,” Hatathlie wrote in her statement. “Decisions were ignored for the urgent need for change prioritizing the interests of lobbyists over the wellbeing of individuals and over human lives.”

Senate President Warren Petersen, R-Gilbert, blamed Republicans, Democrats and lobbyists for working against Hatathlie’s bill for what he said were monetary reasons.

“It made me absolutely sick. All those people need to ask, do you have blood on your hands?” Petersen said.



Rep. Matt Gress, R-Phoenix, ran a similar bill to Carroll’s in the House and said he regretted the House wasn’t able to consider Hatathlie’s bill deeper into the session. Although he said SB1361 was an important step that would help cities know where sober living facilities are and if they’re meeting health care standards.

“There will be another session. There will be another chance to address this,” Gress said. “They deserve better than what they got.”

House members voted 52-6 on June 14 to pass SB1361. It passed out of the Senate earlier in the session 20-8 but needed a final vote in the chamber before adjournment.

The Senate did not put the bill up for a vote. Petersen has been vocal about his support for Hatathlie’s bill. He testified for the bill in the House Health and Human Services Committee and said it’s the only time he’s ever testified for another legislator’s bill.

But with no sober living homes measure making it through the Legislature, lawmakers will have to look at 2025 to take on the issue again.

Officials in the executive branch are continuing to address the issue.

On May 30, Attorney General Kris Mayes announced the first prison sentence related to the Medicaid fraud scandal.

Ariell Dix pleaded guilty to two felony charges of illegal control of an enterprise, according to a news release from the Attorney General’s Office. She was sentenced to three and a half years in prison.

“This conviction and sentencing are a major step in our fight against sober living home fraud,” Mayes said in a written statement. “Make no mistake, criminals who defraud Arizona taxpayers and prey on vulnerable communities will be investigated and aggressively prosecuted by my office. I am proud of the work done by the agents and prosecutors at the Arizona Attorney General’s Office in ensuring justice is served in this case.”

Dix helped facilitate tens of millions of dollars of Medicaid fraud between January 2019 and September 2021 by helping establish fake clinics to fraudulently bill the Arizona Health Care Containment System, the state’s Medicaid agency, according to the Attorney General’s Office. She also falsified patient records and obtained patients for the fraudulent entities she was involved with.

 

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