The owner and operator of addiction treatment facilities in Orange County has been charged by a federal grand jury indictment alleging he paid nearly $175,000 in illegal kickbacks to so-called “body brokers” in exchange for finding him new patients. He pleaded not guilty on April 29, and trial has been set for June 25th.

57 year old Scott Raffa who lives in Newport Beach, was arrested Saturday at Los Angeles International Airport. Raffa is charged with 12 counts of illegal remunerations for referrals to clinical treatment facilities.

According to the indictment that a grand jury returned on April 10, Raffa operated Orange County-based sober living homes, including Sober Partners Waterfront Recovery Center, Sober Partners Reef House, and Sober Partners Beach House. These facilities treated patient populations that received health care benefits through health insurers.

Raffa allegedly paid thousands of dollars per patient in illegal kickbacks to individuals who referred patients to his facilities, a practice known as “body brokering.” The body brokers in this case each controlled their own business entities and Raffa allegedly paid them kickbacks by depositing checks or wiring money to bank accounts that the brokers controlled. The kickbacks were intended as compensation for the brokers referring patients and to induce the brokers to continue to refer patients to Raffa’s facilities, the indictment alleges.

Raffa allegedly entered into sham contracts with certain body brokers that were designed to conceal the nature of the illicit payments, including by purportedly prohibiting payments from Raffa’s sober living homes based on “volume or value” of the body brokers’ patient referrals.

The brokers and Raffa allegedly met or would communicate via encrypted messaging services to calculate and negotiate the kickback amounts he owed the brokers for patient referrals. The kickback amounts allegedly were based on the insurance revenues that Raffa expected to receive for the respective patients, factoring in each patient’s insurance provider and the duration of the patient’s treatment at one of his sober living homes. Raffa refused to pay the kickbacks unless patients received at least 21 days’ treatment at one of his facilities, according to the indictment.

From April 2020 to October 2021, Raffa paid a total of $174,600 in illegal kickbacks to body brokers, the indictment alleges.

A report by the Orange County Register said that the DOJ’s Sober Home Initiative began in 2021, after O.C. overtook South Florida as the national epicenter for addiction industry fraud. Historically, the Miami area had that dubious distinction, but crackdowns in Florida pushed the problems westward, Assistant U.S. Attorney Benjamin Barron, chief of the Santa Ana Branch Office, said at the time.

Myriad arrests and guilty pleas have resulted from the Sober Home Initiative. Most recently, Kevin M. Dickau, 35, of Tustin, pleaded guilty to conspiracy to commit health care fraud on April 23 and was sentenced to 15 months in prison and three years of supervised release.

It doesn’t appear that the DOJ is done just yet. Raffa’s indictment mentions mysterious unnamed body brokers, and when we asked if there’d be more indictments coming, spokesperson Ciaran McEvoy said, “We have no comment.” The vast majority of addiction treatment facilities in the state are here in Southern California.