California SUD Treatment Industry Advertising/Marketing Lawsuit

By: Jeffrey Lynne February 18, 2020 8:57 pm

Time to read: 5 Minutes

https://www.lamag.com/citythinkblog/dueling-lawsuits-between-malibu-rehab-centers-expose-the-shady-side-of-the-recovery-industry/

I am sharing this article, first, to show that while California is still trying to collectively get its head around standards of care and of business operations for addiction treatment and recovery residence providers, Florida is leading the nation by setting new standards, adopting new laws, and vigorously prosecuting bad actors (thanks to the Office of State Attorney Dave Aronberg and now the Attorney General’s Office of Statewide Prosecution). We are not chasing out good providers but rather protecting those who seek solace and recovery in Florida’s exceptional treatment programs and recovery communities.

Second, this is another reminder of the imperative of having all marketing agreements reviewed for compliance, and that a robust, effective compliance program should be a priority for 2020.

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The battle between the two behemoths culminated in a lawsuit filed by Passages in February 2018 and a countersuit filed in August by Cliffside in which each rehab center accuses the other of false advertising and underhanded practices in a cutthroat race to fill their beachside facilities with clients. The massive advertising budgets and fake news sites uncovered in the litigation depict a Wild West of rehabilitation marketing, where people suffering from addictions are treated as profitable “leads.”

As early entrants into the Southern California rehab industry, Passages and Cliffside have always fought for clients—a competition that only grew more intense with the explosion of new treatment centers in the area. There are more than three dozen state-registered recovery or treatment facilities in Malibu, earning the affluent town of roughly 13,000 the often-derided title Rehab Riviera.

Financial records uncovered during the suit show that Taite also pumped millions of dollars into an unbranded referral line heavily promoted on TheFix. In court, Taite admitted that individuals who called the hotline were told they had reached a network of providers, apparently not disclosing the line’s purpose as a customer lead generator for Cliffside and its affiliates. “That was the whole idea,” Taite said of the roughly 1,400 monthly callers, to generate clients.

Ryan Hampton, an advocate for reform in the addiction industry, says deceptive advertising practices and big budgets have allowed Passages and Cliffside to “outgame” reputable treatment providers for the past decade. Taite, for instance, spent $25 million on advertising for his multiple properties from 2011 to 2018—more than four times the combined amount he spent on doctors, nurses, and therapists. In some years Cliffside spent more on massages than on therapists.

“A lot of things that happen commonly in the addiction world would be malpractice if they occurred in mainstream medical care,” says Dr. Sarah Wakeman, an addiction medicine specialist at Massachusetts General Hospital. “Patients are left trying to navigate this often very profit-driven system that can really prey on their vulnerabilities.”