Legislation advances that would increase oversight on patient referrals, ban deceptive marketing practices
New Jersey’s substance use treatment industry is under renewed focus after state lawmakers advanced a pair of bills that aim to better regulate the industry by increasing oversight on patient referrals and banning deceptive marketing practices.
The legislation comes in response to a 2024 State Commission of Investigation report that found unchecked fraud, unethical conduct and deception from businesses at every level of the recovery process. The commission uncovered fraudulent billing, tax evasion, deceptive marketing practices and other misconduct done to fund the lifestyles of addiction treatment executives rather than aid their clients in overcoming substance use disorder.
“The SCI’s reported findings last February were disturbing, and as the state invests more dollars in the treatment of addiction, we need to ensure that patients are actually being treated rather than used for profit,” Sen. Joseph Vitale (D-Middlesex), a primary sponsor of both bills, said in a statement.
The 2024 report followed an investigation by the commission into the addiction rehabilitation industry which commission members and witnesses then detailed in a hearing at the State House. During that testimony in 2022, commission agents highlighted what they said were some of the $42 billion industry’s alleged predatory practices, including one known in the industry as “body brokering.” That’s a practice where some recovery coaches — professionals who provide guidance and support to people in recovery — get paid to refer clients with full insurance coverage. The practice is illegal in New Jersey and against federal law, but allegedly prevalent in a business that prizes clients with insurance.