Three Convicted in $8 Million Suboxone Fraud Scheme

On March 20, 2025, A jury in a federal court in Lexington, Kentucky, convicted three people for fraudulently billing Medicare and Medicaid over $8 million for Suboxone prescriptions between October 2017 and December 2020.

According to the evidence presented at trial, Dr. José Alzadon, Michael Bregenzer, and Barbie Vanhoose ran an illegal Suboxone fraud scheme through a series of rehabilitation clinics called Kentucky Addiction Centers (KAC).  Dr. Alzadon served as the medical director of KAC.  Bregenzer was the CEO and part owner, and Vanhoose was the billing manager.  KAC had locations in Winchester, Paducah, Paintsville, and London, Kentucky.

The trio’s Suboxone fraud scheme involved billing Medicare and Kentucky Medicaid for patient services that either did not happen or were not as complex as the services reported as rendered in the reimbursement claims.  Additionally, Alzadon, Bregenzer, and Vanhoose falsely billed for services under the name of Dr. Alzadon’s elderly father, who has DEA prescribing credentials which allowed him to prescribe substances such as Suboxone. The coconspirators took advantage of these credentials to bypass insurance issues Alzadon faced, prescribing Suboxone for patients whom Dr. Alzadon’s father never actually examined.

Vulnerable Patients Exploited for Profit

Treating opiod patients with Suboxone can be legitimate, but according to one prosecutor, the defendants here “turn[ed] these vulnerable patients into cash machines by directing policies that billed their insurers for unnecessary or unprovided medical services.”

While all three defendants denied the charges against them, the jury convicted them after deliberating for less than four hours.

Convictions and Upcoming Sentencing

Alzadon, Bregenzer, and Vanhoose were each convicted on eight counts of healthcare fraud, one count of conspiracy to commit health care fraud, and one count of conspiracy to distribute controlled substances using the DEA registration number of another person.  Additionally, Alzadon and Vanhoose were each convicted on two counts of aggravated identity theft for using the credentials of Dr. Alzadon’s father to prescribe Suboxone to patients.

Each count of healthcare fraud conspiracy and substantive health care fraud carries a maximum sentence of ten years in prison, while each count of conspiracy to distribute controlled substances carries a maximum sentence of four years in prison.  The counts of aggravated identity theft carry a mandatory minimum sentence of two years in prison.

The Honorable Karen K. Caldwell of the U.S. District Court for the Eastern District of Kentucky set sentencing for Alzadon and Bregenzer for June 25, 2025, and sentencing for Vanhoose on June 26, 2025.

Suboxone: A Controlled But Common Treatment

The Kentucky Addiction Centers now appear to be closed. The KAC website states that “Kentucky Addiction Centers LLC is a private organization offering outpatient treatment in Winchester, KY, that caters to adults and young adults seeking help for substance use disorders.  This center offers programs for substance use treatment including cognitive behavioral therapy, motivational interviewing, matrix model, relapse prevention and SUD counseling.”  Other online sources for the facilities advertise a range of payment and insurance options that are accepted, including Medicare and Medicaid.

Suboxone, a combination of the drugs buprenorphine and naloxone, is one of the most frequently prescribed drugs to help patients manage substance use disorder.  Suboxone decreases the symptoms of opioid withdrawal and can be prescribed for withdrawal from drugs such as heroin, oxycodone, and fentanyl, among others. It was approved by the FDA in 2002, and since the second wave of the opioid crisis began in 2010, has become a regularly prescribed drug to help treat substance use disorder.  Suboxone also has a safer side effect profile than similar drugs, such as methadone.

However, Suboxone is still classified as a Schedule III controlled substance under the Controlled Substance Act, meaning it has “moderate to low potential for physical and psychological dependence.”  Accordingly, physicians who wish to prescribe Suboxone need a special license from the Department of Health and Human Services, as the drug could still cause some people to develop substance use disorders.

A fourth individual who was charged in the Suboxone fraud scheme pleaded guilty in December 2023.  It was determined that her role in the fraud resulted in a combined loss of $814,820 to Medicare and Medicaid.

Healthcare providers at other facilities have been charged with similar activity.  For example, in February 2025 the U.S. Attorney’s Office filed a complaint alleging that a group of 19 skilled nursing facilities (SNFs) in Massachusetts and Connecticut fraudulently billed Medicare and Medicaid for unnecessary services.  Similarly, in 2016, the defendants in a case against Kindred Healthcare, Inc. agreed to a settlement of $125 million to dismiss claims that they had fraudulently billed Medicare for services at SNFs that were not necessary or did not happen.