Boards set up outside the storefront of Drumbeat, a Native American goods store located in Phoenix, display missing people posters of Indigenous people from tribal nations across Arizona. Reva Stewart displays the missing person posters to help raise awareness. Photo by Shondiin Silversmith | Arizona Mirror
It has been nearly two years since the predatory practice that intentionally targeted Indigenous people by offering them shelter, food and rehabilitation help they never got was exposed and state officials moved to shut it down.
In 2023, Gov. Katie Hobbs, Attorney General Kris Mayes and the Arizona Health Care Cost Containment System (AHCCCS) announced the existence of the fraudulent sober living homes in the state after more than a year of Indigenous advocates voicing their concerns within their communities.
The scheme harmed thousands of Indigenous people who have either been killed, drugged, physically hurt, gone missing or were left on the street and abandoned in the city after falling victim to the scam.
“There was so much harm,” Attorney Dane Wood said, and that harm is why his law firm BrewerWood filed a class action lawsuit against the state for negligence and misconduct over how it handled the fallout from the fraudulent sober living homes.
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He said the goals of the fraudulent facilities were purely financial. The Indigenous people who they targeted in order to take advantage of their government health care benefits did not get any real help, Wood added, noting that the “state was very much aware of it in the early stages.”
The lawsuit states that the “grossly negligent and indifferent misconduct” of the State of Arizona, including state agencies AHCCCS and the Arizona Department of Health Services (ADHS), has caused thousands of Indigenous people to suffer and incur “horrific injuries, deaths, dangerous drug addictions, fraudulent mental health services, homelessness, and other damages.”
Wood said they have collected “countless stories” of the harm the fraud has caused among Indigenous people. The suit breaks those victimized into four subclasses: wrongful death, injury, displacement and services not rendered.
The total number of people harmed isn’t known, Wood said, because the state hasn’t disclosed that information. But from their research, he said it is “in the vicinity of about 7,000.”
Arizona is culpable for creating the crisis, the lawsuit states, noting that the sober living crisis grew worse even after the state knew about “the extreme magnitude of the fraud and harm” as far back as the summer of 2019.
The lawsuit claims that the state’s failure to respond to the fraud caused the sober living crisis and allowed the harm to “grow, spread, and flourish at unprecedented catastrophic levels.”
Advocate Reva Stewart has been at the forefront of the crisis for several years, and she first spoke out about the fraud to the state during a public hearing held by Arizona’s Missing and Murdered Indigenous Women and Girls Task Force in November 2022 on the Salt River Pima-Maricopa Indian Community.
Her public concerns were voiced nearly six months before Hobbs and Mayes announced the state’s acknowledgment of the fraud. She continues her advocacy efforts to help people impacted by the sober living crisis through her non-profit Turtle Island Women Warriors. Her group, Stolen People Stolen Benefits, prioritizes helping any Indigenous person affected by the ongoing scheme.
So, when the BrewerWood law firm reached out to Stewart about her expertise on the online crisis, she hesitated to speak with the lawyers because she was unsure if it was the best move for the people.
“I don’t trust anybody,” she said, and she wanted to ensure that any litigation was in the best interests of the people impacted.
Stewart said she decided to help with the lawsuit because so many Indigenous people have died due to the fraudulent homes, so many have been reported missing and continue to go missing.
“The state is not taking responsibility for what they did,” Stewart said, adding that they’ve known about it for years and let it get out of hand.
“I want them to be held accountable,” she added. “I want accountability for every single person that was affected by this.”
Stewart said she couldn’t comment on how she is helping with the lawsuit, but she has shared the information she has gathered over the years, including the stories of people directly impacted by the fraud.
She said that the state could have ended it when they found out about the fraud in 2019, but “they chose not to.” That decision means Indigenous people have died and billions of dollars have been stolen.
Stewart said there are so many parts of the sober living crisis that have not been addressed by the state, including the deaths and how it’s led to an influx of other substance abuse problems among individuals who were seeking help from the homes.
“They’ve only really approached the fraud aspect of it,” she said, adding that she hopes the lawsuit will shed light on the situation and help people better understand the severity of what has happened because so much is going unreported.
Stewart said she has counted nearly 2,000 deaths related to the fraud and she knows that number will only go up.
Stewart still works to help the Indigenous people victimized by the scam in Arizona because it is still happening. She said her small team’s recent outreach efforts included handing out care packages to more than 260 people.
“The numbers are rising again,” she added. “Something has to give, and with the lawsuit, I pray that happens.”
The lawsuit states that at no time has the State of Arizona “suggested, intimated or even hinted at the concept that it was responsible for harm caused to Native Americans.”
“The state has not been accountable to those families under our legal system of compensating them for the harm that has already occurred,” Wood said. The lawsuit does not state a dollar amount for compensation.
When the state announced its crackdown on sober living homes, many initiatives were launched to take action against fraudulently operated homes, including investigating and shutting fraudulent homes, creating a statewide hotline to provide resources to the individuals impacted and reorganizing AHCCCS policies.
The Arizona Mirror asked AHCCCS to comment on the lawsuit. The agency said it could not comment on the pending litigation but provided a joint statement with ADHS.
“Addressing behavioral health fraud remains at the forefront of our efforts,” the agencies said. “Governor Hobbs and State Agencies have acknowledged the pain and suffering associated with behavioral health fraud and the significant impact on Tribal nations in Arizona.”
The health agencies said that the Hobbs administration took swift action against the fraudulent providers, prioritized an emergency humanitarian response and continues to prioritize operational reform in collaboration with law enforcement and tribal partners.
“Our focus remains protecting the populations we serve, ensuring that Arizonans receive the vital care and services they need, and eliminating fraud,” they added.
Hobbs said in an interview with the Arizona Mirror that she could not comment on the lawsuit, but the state is still responding to the sober living crisis.
“We’re doing everything we can to help folks who’ve been impacted by the situation,” Hobbs said. “We’re continuing to take the administrative action that we feel is the right move to keep it from happening on the widespread scale that it’s been happening.”
Hobbs said that the state’s response was broad, which included shutting down any providers suspected of fraud and finding the loopholes allowing them to operate.
The state’s broad response has been criticized, Hobbs said, but she feels they had to act to shut down the “bad actors” who were at the forefront of the fraud.
The state also launched a hotline for people impacted, implemented stricter provider enrollment and rolled out a humanitarian response to help the victims. There also were new initiatives to combat waste, fraud, abuse and exploitation, and legislation to bring transparency and accountability to Arizona’s health care system.
Hobbs acknowledged that the administration of her predecessor, Republican Gov. Doug Ducey, learned of the fraud but did not act to halt it. She said she is not sure exactly how long the fraud has occurred, but it was primarily treated as a “one-off situation” rather than a sprawling fraudulent scheme in which “bad actors are taking advantage of the system.”
“We knew that that would probably be the harder path, that it would be more complex, and that there would be more fallout,” Hobbs said. That included catching legitimate providers in the dragnet and Indigenous people being left without services.
“We’re working through all that,” she added. “We’re always going to try to do better, and there are certainly things that, if we had to do it again, we might do differently.”
Hobbs said the state’s response to the sober living crisis is not done, and it’s essential to keep tribal communities involved and engaged so they can work together to address the issue.
An initiative Hobbs introduced as part of her executive budget to help sober living victims is the Sober Living Home Tribal Response Fund, which will direct $7 million to assist tribes in continuing to respond to this crisis.
“I know that more work must be done,” Hobbs said. The Attorney General’s Office will lead the efforts to carry out the response fund.
In 2023, Mayes called the fraud a “stunning failure” of the government and said that their office would work to address it adequately.
In the last two years, her office has prioritized cases involving fraudulent sober living homes. This has resulted in the indictment of several individuals for behavioral health fraud, the conviction and prison sentence of one case, and the forfeiture or seizure of more than $140 million worth of cash, real estate holdings, vehicles and luxury assets.
“My office will continue to investigate, aggressively prosecute, and demand justice from the bad actors who profited off of the exploitation of some of the most vulnerable members of our society,” Mayes said in a statement to the Arizona Mirror regarding the class action lawsuit.
As a way to help the tribal communities impacted by the fraudulent sober living home practices, the attorney general’s office launched a $6 million grant program for tribal nations and non-profits.
“Every community deserves care they can trust,” Mayes said in a statement announcing the program. “This funding will help Tribal Nations provide much-needed support for individuals impacted by the fraudulent sober living home scandal.”
The Sober Living Home Support Program offers grants of up to $500,000 to tribal nations or non-profits working to provide compensation, remediation and supportive housing for those affected by the fraud.
“This grant program represents the commitment of the Attorney General’s Office to supporting communities that have incurred costs responding to the crisis,” said Richie Taylor, a spokesperson for Mayes.
He added that the grant program’s funding is designed to alleviate economic loss and support recovery, and said it reinforces Mayes’ commitment to remedying the harm caused by fraudulent practices targeting Arizona’s vulnerable communities.
“Attorney General Mayes wants Tribal nations and non-profits to know how deeply she cares about this issue and the challenges faced by tribal communities because of this crisis,” Taylor said in a statement. “She will continue to do everything in her power to pursue accountability and justice.”
The grant program’s funding comes from the Anti-Racketeering Revolving Fund, which is a fund that consists of monies awarded through a court order to law enforcement agencies that perform investigations of racketeering crimes or crimes committed for financial gain.
Currently, the grant program is only available for tribal nations and non-profits, not individuals directly harmed by the fraud.
However, Taylor said tribal nations awarded funding could use the funds to provide compensation, remediation, or supportive housing for those affected by the crisis.
“Providing grants to Tribal nations and non-profits allows us to get resources to communities as quickly as possible,” he said. “We look forward to learning how tribal nations and non-profits intend to use any grant money awarded to them.”
“This grant alone cannot fully compensate for the damages that Tribal communities have experienced,” Taylor said. “But it is a start.”
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This story originally appeared on Arizona Mirror on January 21, 2025. It is published under a Creative Commons license (CC BY-ND 4.0).
Arizona Mirror is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Arizona Mirror maintains editorial independence. Contact Editor Jim Small for questions: info@azmirror.com.
