LEXINGTON, Ky. — Kentucky's largest drug rehab provider is facing federal investigation and state regulatory findings after former employees alleged the company instructed staff to falsify invoices and overbill Medicaid for nonexistent treatment services, according to a ProPublica investigation published in partnership with the Lexington Herald-Leader.

Renault Shirley, 58, a former peer support specialist at Addiction Recovery Care, recalled being asked in 2023 to submit an invoice for canceled treatment sessions and fabricate details of group discussions, including client quotations, as if the meetings had occurred. "It was fraud," Shirley told investigators, adding that he refused but witnessed others engage in the practice regularly.

ARC, headquartered in Louisa and founded by lawyer and recovering alcoholic Tim Robinson, had become dominant in the state's treatment landscape. Between 2019 and 2024, the company billed the state $1.7 billion and received more than $377 million in Medicaid funds. At its peak in 2024, ARC operated two-thirds of all treatment beds in Kentucky.

The company sometimes billed when gatherings did not meet treatment requirements—such as when clients watched unrelated movies, played board games instead of attending group meetings, or when meetings simply did not occur, according to six former employees interviewed for the investigation. Other staff members reported being asked to meet billing "quotas" each week.

The FBI investigation was triggered by a 2023 whistleblower lawsuit alleging ARC fraudulently billed Medicaid for a therapeutic service called psychoeducation. A 2025 investigative report by the Kentucky Cabinet for Health and Family Services, obtained by ProPublica and the Herald-Leader, found ARC violated numerous regulatory standards, with lack of clinical staff identified as a primary deficiency creating "an immediate danger to client health, safety and welfare." That investigation was launched following a client death in July 2025 at one of ARC's largest facilities.

ARC acknowledged hiring a compliance and auditing team and said it "voluntarily disclosed" billing errors to state and federal authorities. The company denied intentional fraud, with Vice President of Marketing Vanessa Keeton stating that "ARC has never knowingly or fraudulently billed Medicaid for services." A draft settlement with the Department of Justice remains unsigned, according to documents obtained by the news organizations.

Despite internal fraud allegations, ARC had received public praise. The U.S. Department of Health and Human Services lauded the company as a model provider, Newsweek named it among the nation's best addiction treatment facilities, and Gov. Andy Beshear previously called Robinson "an essential partner in our fight against addiction."