'Our voices as Navajo are not being heard': Tribal members condemn sober living bill vote

Leaders from Arizona's largest tribe say they are deeply disappointed by the failure of a Navajo legislator's effort to reform a system that allowed massive Medicaid fraud and humanitarian crimes to happen.

The defeat of Sen. Theresa Hatathlie's bill by her fellow Democrats is sending a negative message about the state's commitment to the Indigenous people who were targeted by the Medicaid schemes, said Navajo Nation Attorney General Ethel Branch, who emphasized that she was speaking her personal opinion and not on behalf of the tribe.

"She (Hatathlie) of course is coming to this with deep compassion for her fellow community members, as well as a personal connection to the issue," Branch said in a March 23 interview with The Arizona Republic. "It's just so deeply disappointing."

Hatathlie, D-Coal Mine Mesa, is a member of the Navajo Nation, and several tribal members joined her on the state Capitol lawn on the day of the March 21 House hearing to show their support for her bill, Senate Bill 1655. The bill sought reforms for behavioral health entities in Arizona, including sober living homes, that included stepped-up regulation and steeper fines for violations.

"To me, our voices as Navajo are not being heard in the state of Arizona," Thomas Cody, executive director of the Navajo Nation's Division of Social Services, told The Arizona Republic after the bill's defeat. "I was incredibly disappointed. I think the state, mainly the elected leadership, should have really supported this bill."

So-called "bad actors" affiliated with behavioral health treatment facilities were using patients in purported sober living homes as currency to submit claims for services to Arizona's Medicaid program that were upwards of $1,000 per patient per day, Arizona Attorney General Kris Mayes' office has said.

The bad actors were disproportionately targeting Indigenous people enrolled in a small Medicaid program called the American Indian Health Program, investigators have said. The American Indian Health Program bills on a fee-for-service basis, which was apparently easier to fleece than the managed care organizations that oversee the vast majority of Arizona's Medicaid enrollees.

Tribal official questions Democrats' commitment to Navajo people

After making it through the state Senate on March 12 on a final vote of 27-3, the bill on March 21 failed to clear the House Health and Human Services Committee. The vote was 7-3. The only "yes" votes came from Republicans on the committee: Rep. Matt Gress, R-Phoenix, Rep. Barbara Parker, R-Mesa, and Rep. Beverly Pingerelli, R-Peoria. Parker said that flaws in the bill that health care entities raised could be an "easy" fix with one line, but it wasn't enough to get the necessary "yes" votes from Democrats.

"I think to me it raises the question of how, going into the election season, how committed Democrats are to creating solutions in Indian Country and to protecting Navajo people," Branch told The Republic. "It deeply bothers me that Democrats did not stand behind Senator Hatathlie on this issue."

Hatathlie said she felt the defeat of her bill was political. The vote showed that Arizona leaders are not committed to making the difficult choice of true change to address the tragedy of the fraud, which is estimate to have cost taxpayers up to $2.5 billion, she said. And she stood by her proposal that sober living homes have two paid staff per every six residents, 24/7, which sober living home providers have said is "not a sustainable model."

Opponents say their "no" votes were because of numerous flaws in the bill that drew a wide range of critics who spoke against the requirement that every provider of behavioral health services in the state get a state license as a "behavioral health entity."

Those opponents included the Arizona Medical Association, the Arizona Nurses Association, the Arizona Hospital and Healthcare Association and the Arizona Alliance for Community Health Centers.

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Hobbs says she 'remains committed' to cracking down on fraud

At least two Republican legislators — Sen. Anthony Kern, R-Glendale and Sen. Warren Petersen, R-Gilbert — have said that Democratic Gov. Arizona Katie Hobbs was against Hatathlie's bill, but Hobbs' office did not answer a question about whether that is true.

When The Arizona Republic asked whether the governor's office was behind an effort to block Hatathlie's bill, a spokesperson for Hobbs' office texted a statement that says without the leadership of Hobbs and Arizona Attorney General Kris Mayes, the Medicaid fraud schemes and sober living home crisis they created "would have continued unabated."

Since Hobbs discovered the problems shortly after taking office in January 2023, Hobbs "has worked tirelessly to hold bad actors accountable and protects Arizonans," the statement from Hobbs' spokesperson Christian Slater said.

Hobbs "remains committed to working with everybody to deliver solutions that will improve the standards of care, prevent fraud and crack down on bad actors seeking to exploit vulnerable people for profits," Slater wrote.

Hatathlie isn't certain what her next step will be, but doesn't think she'll be supporting a sober living bill sponsored by Frank Carroll, R-Sun City West, which the House Health Committee passed on the same day that her bill failed.

Carroll's bill is more narrow than Hatathlie's in that it targets only sober living homes and not a wider category of "behavioral health entities." The Carroll bill has the support of the Arizona League of Cities and Towns, but some providers in the sober living community are against it, saying it is too broad and administratively burdensome.

Financial burdens associated with licensing in the Carroll bill would force closure of 119 "Oxford House" homes in Arizona, representing 1,000 beds for people in recovery, Oxford House representative Nathan Truitt told the House Health Committee on March 21. A House bill that is similar to the proposed Carroll legislation, House Bill 2317, is going through the Senate.

Oxford Houses are peer-led self-supporting and drug-free homes and operate on the "largest recovery model in existence," Truitt told the committee. They don't require licenses and Truitt wants the Carroll legislation to be amended to continue exempting them.

Sponsors of the bills have said they are trying to curb a problem that has caused havoc in numerous Valley neighborhoods, where people with drug and alcohol dependence have been essentially warehoused with promises of recovery treatment they didn't receive. The Arizona Attorney General's Office has issued more than 70 criminal indictments related to the cases.

One national expert says the Hatathlie, Carroll and Gress bills all got it wrong.

The answer is targeted enforcement of existing laws to prevent fraud in behavioral health facilities, said Dave Sheridan, executive director of the National Alliance for Recovery Residences. The Arizona Department of Health Services and Arizona's Medicaid program, which is called the Arizona Health Care Cost Containment System, should not be getting more regulatory responsibilities, he said.

"They have two agencies that appear to have been sitting on their hands for the better part of four years while all this abuse is happening, and they (legislators) want to vest those agencies with more power?" Sheridan said. "It just reminds me of 'Casablanca,' let's round up the usual suspects ... You've got to target the source of the fraud."

Branch said that investigators with the Navajo Nation are still working to assess the scope of fraud schemes. Hatathlie's bill was a start, it was comprehensive, and it was led by a trusted fellow tribal member, she said.

When outsiders come to tribal communities specifically for the purpose of taking community members "and never returning them," that is problematic, especially if they are inducing them with lies to get into their vehicle, or providing them with drugs and alcohol, Branch said.

More needs to be done, she said, not just on a state level, but on a federal level, too.

"It's Native American human trafficking, which has been a problem since contact. So that needs to stop," she said. "We are in the 21st century. ... No American should be treated like this."

Reach health care reporter Stephanie Innes at Stephanie.Innes@gannett.com or at 602-444-8369. Follow her on X, formerly known as Twitter @stephanieinnes

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This article originally appeared on Arizona Republic: Sen. Theresa Hatathlie's sober living bill blocked by fellow Democrats