MINNEAPOLIS — Special Agents from the Federal Bureau of Investigation’s Minneapolis Field Office along with the U.S. Department of Health & Human Services Office of Inspector General have begun interviewing former employees and contractors of the for-profit addiction recovery company Kyros and its nonprofit partner Refocus Recovery, according to multiple sources.
Three former company insiders, who asked not to be named, told KARE 11 they’ve spoken with the federal agents in either hours-long prearranged meetings or when the agents showed up at their door unannounced.
Since December, KARE 11 has been reporting about questionable billing practices by the two related entities.
Refocus Recovery and Kyros were both founded by Daniel Larson.
Under the law, for-profit companies like Kyros cannot bill Medicaid directly for what are known as peer recovery services – where people in recovery are paid to help mentor others battling addiction.
The nonprofit Refocus Recovery can bill the taxpayer-funded program. So, records show the nonprofit founded by Larson has hired his for-profit company to provide the peer services.
Records reviewed by KARE 11 show Refocus Recovery has billed taxpayer-funded Medicaid millions of dollars to provide peer services to help people recovering from addiction.
The latest available tax filings reveal that virtually all of the nonprofit’s revenue ended up in the for-profit company’s coffers.
Although Kyros says the organizations operate independently, critics – including a prominent national organization – have questioned whether Refocus is using its nonprofit status to effectively serve as a pass-through for millions of taxpayer dollars to profit-making Kyros.
In December 2021, Kyros projected making nearly $30 million in gross profit by the end of this year through Medicaid billings, according to a copy of an “Investment Overview” obtained by KARE 11.
KARE 11’s investigation uncovered evidence suggesting that Kyros, through Refocus Recovery, billed taxpayers for addiction recovery services that were never provided. The records – and interviews with former clients and staff – also exposed questionable practices such as group billing, billing for watching movies, and billing for unauthorized phone calls – possible violations of state and federal laws.
A spokesperson for the FBI said they could neither confirm nor deny the existence of an investigation into Kyros and Refocus Recovery.
However, KARE 11 has seen the business cards of the Special Agents for the FBI and HHS who interviewed the former workers and requested records in their possession.
The Minnesota Attorney General’s Office also has active criminal and civil investigations underway, sources tell KARE 11.
While Kyros or Refocus Recovery have declined all interview requests, in social media posts Matt McLane, former Kyros Senior VP and current Refocus Recovery acting Executive Director, labeled KARE’s reporting as biased, inaccurate, and sensationalized.
The former Refocus executive director, longtime state legislator and current Blaine Mayor Tim Sanders stepped down earlier this year and has posted similar allegations about KARE’s reporting being “irresponsible and inaccurate.”
No one from Kyros or Refocus Recovery responded to emails from KARE 11 requesting interviews to discuss the federal investigation.
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