Insurer moves to drop Narconon of Georgia for fraud

by: Jodie Fleischer Updated:

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NORCROSS, Ga. - A local drug rehab facility that's been the subject of a year-long Channel 2 Action News investigation is facing new trouble.

Narconon of Georgia's own insurance company is now trying to drop its coverage, accusing the program of fraud.

In a federal court filing, the Illinois-based Evanston Insurance Company says Narconon of Georgia "made the misrepresentations with the actual intent to deceive" and that the insurance company has "no obligation ... to defend or indemnify Narconon."

A federal judge has yet to rule on the status of the insurance policy. An attorney for Narconon of Georgia declined to comment because of pending litigation.

"The insurance company is simply saying 'we don't insure for fraud and if they committed fraud we're not going to insure them,' and that's not a surprising position for them to take," said attorney Jeff Harris, who represents five families who filed a class action lawsuit against Narconon of Georgia and affiliated entities in June.

The pending lawsuit could be worth millions of dollars, and is based largely on allegations of insurance fraud, credit card fraud, and all around misrepresentation first exposed by a series of Channel 2 Action News investigations.

"The main thing is to stop them from preying on other families," said Rhonda Burgess who sent her son to Narconon of Georgia to fight an addiction to pain pills.

Instead, she and her husband say they ended up with credit cards opened in their names without permission.

"There's nothing but fraud happening there. It's all about making money, it's not about helping anyone," said Ben Burgess.

Georgia's insurance commissioner agrees. In April, investigators with his fraud unit raided Narconon's facility in Norcross, carrying out computers and boxes of documents.

In February, one mother told Channel 2 she paid her daughter's treatment in full, then noticed $166,000 billed to their insurance company.

"I don't think there's any doubt that there was some insurance fraud going on," said Georgia Insurance Commissioner Ralph Hudgens.

His investigators will turn over their findings to Gwinnett County District Attorney Danny Porter, who has opened a criminal investigation.

Last fall, investigative reporter Jodie Fleischer caught the facility advertising long-term residential care, though it's only licensed for outpatient services.

In December, Georgia's Department of Community Health, re-inspected and then revoked Narconon of Georgia's license. The program appealed, and has twice delayed a scheduled hearing, now slated for the end of September.

The class action lawsuit aims to represent all current and former Narconon of Georgia patients. The plaintiffs have said they hope to recover enough money to force the rehab out of business.

The suit alleges Narconon failed to disclose that it's rooted in the Church of Scientology, an arm of which licenses the program's teachings.

The church also purports that the cornerstone of treatment, spending hours each day in a sauna, allegedly rids the body of drug toxins.

"If they're candid with folks and tell them all those things and they make the decision to still go there, that's fine. But you can't make misrepresentations and then have families rely on those misrepresentations," said Harris.

Harris said even if the insurance policy is deemed void, he will follow the money trail to try to recoup his clients' payments of $30,000 to $50,000 each. He believes Narconon of Georgia funneled money to its parent company, Narconon International, and even to the Church of Scientology itself.

Families like the Burgesses say it left them in financial ruin.

"I feel like they're vultures. They're predators that are sucking the life out of people by doing this. They're taking advantage of a tragic situation," said Rhonda Burgess.



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