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KARE 11 Investigates: Kyros CEO Daniel Larson steps down

Amid an FBI investigation, the head of for-profit addiction recovery company Kyros steps down from the firm he founded.

GOLDEN VALLEY, Minn. — Daniel Larson, the founder and CEO of the tech company Kyros, is stepping down, according to a statement from the company.

Kyros is one of the organizations at the center of KARE 11’s “Recovery, Inc.” investigation into alleged Medicaid billing irregularities by addiction recovery organizations.

Earlier this month, KARE 11 reported that 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 Kyros employees and contractors.

In February, the Inspector General for the Minnesota Department of Human Services told state lawmakers they also have opened an active investigation into Kyros and its nonprofit partner Refocus Recovery.

Credit: KARE 11
Multiple sources confirm the FBI is investigating Kyros.

Since December, KARE 11 has been reporting about questionable billing practices by the two firms.

Former clients told KARE 11 they believed the Kyros-Refocus partnership billed taxpayers for services they did not receive. KARE 11 documented how Kyros had sponsored taxpayer-funded movie nights and contests to see who could bill Medicaid the most. Former employees said they were instructed to bill for things the law does not allow, such as phone calls and group outings.

The billings involved so-called “peer services” – where people in recovery are paid to help mentor others battling addiction.

Effective in 2019, the Minnesota legislature allowed peer services to be reimbursable for the first time through Medicaid, the taxpayer-funded federal health insurance program for the poor and disabled.

Credit: KARE 11
This Kyros email obtained by KARE 11 promotes a taxpayer-funded movie night.

KARE 11’s investigation exposed how Larson founded both the tech company Kyros and the nonprofit Refocus Recovery and used the nonprofit to funnel millions of tax dollars into the for-profit.

Under the law, for-profit companies cannot bill Medicaid directly for peer services. But the nonprofits can. So, records show Refocus Recovery, the non-profit Larson founded, hired Kyros, the for-profit he created, to provide the peers.

Between January 2022 and October 2023, state records show Refocus was reimbursed more than $14 million – more than all other peer support non-profits in Minnesota combined.

In publicly filed tax returns, Refocus Recovery revealed that more than 96% of the nonprofit’s revenue in 2022 went to subsidiaries of Larson’s for-profit company.

The tax filing also disclosed that Larson owned “greater than 35%” of Kyros at the time. Tax returns for 2023 are not yet available.

Credit: KARE 11
Refocus paid Kyros $4.5 million in 2022 - more than 96% of the non-profit's revenue.

In response to a KARE 11 inquiry, a Kyros spokesman emailed a statement that said: “Daniel Larson has informed the Kyros board of directors that he will step down from his position as CEO … Our purpose is larger than any one person, and we all remain focused on working diligently every day to advance a system that delivers the highest level of recovery care with improved outcomes.”

When KARE 11 called Larson, he said, “As always, I have no comment for you.”  And he hung up.

Per the Kyros statement, the company’s COO Kristin Landry has been selected by the board to serve as the next CEO.

According to KARE 11 sources, there’s also a federal investigation underway into Evergreen Recovery, a prominent addiction treatment facility in St Paul.

KARE 11’s "Recovery Inc." investigation exposed whistleblower allegations of fraudulent billing practices at Evergreen. Like Kyros, former Evergreen clients and employees claim the company overbilled taxpayers for recovery services.

Officials from Kyros, Refocus and Evergreen all say they are doing important work helping people overcome addiction. Although they acknowledge there may be occasional billing errors, they deny allegations they’ve deliberately overbilled Medicaid.

If you have a tip for our investigative team, email investigations@kare11.com.

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