April 29, 2024 - SANTA ANA, California – The owner and operator of addiction treatment facilities in Orange County is expected to be arraigned today on 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.

Scott Raffa, 57, of Newport Beach, was arrested Saturday at Los Angeles International Airport. He is scheduled for arraignment this afternoon in United States District Court in Santa Ana. 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.

An indictment is merely an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

If convicted of all charges, Raffa would face a statutory maximum sentence of 10 years in federal prison for each count.

The FBI is investigating this matter.

Assistant United States Attorneys Benjamin R. Barron and Nandor Kiss of the Santa Ana Branch Office are prosecuting this case.
Source: DOJ Release