A judge in Raleigh has upheld state sanctions against United Youth Care Services, revoking the Greensboro business’s license to provide drug-treatment services while also ordering the agency to pay its fines and stop admitting new clients .

The decision issued on Sept. 2 by Administrative Law Judge Donald Overby found that the state Division of Health Service Regulation acted appropriately by revoking UYCS’s license based on its failure to comply with state laws and regulations. Based on violations and deficiencies documented by state inspectors in August and December 2019, Overby wrote that the agency’s “failure to comply with licensure statutes and rules endangered the health, safety and welfare” of the clients in two outpatient drug treatment programs. The decision not only upholds the revocation of UYCS’s license and orders the agency to stop admitting new clients, but also upholds fines totaling $57,500.

The abuses by staff at UYCS, which centered on offering housing to people experiencing homelessness so that the agency could bill Medicaid for drug-treatment services, were the subject of extensive media coverage by Triad City Beat and the News & Record. TCB’s coverage is a finalist for the Association of Alternative Newsmedia’s David Carr Investigative Reporting Award. Eight former clients told TCB that UYCS used an array of ploys to falsify their substance abuse, which included encouraging them to exaggerate or lie, tampering with urine samples and manipulating their paperwork.

While finding that UYCS exploited clients through a scheme that made “their housing contingent on the facility obtaining Medicaid reimbursements,” Overby’s decision discounted the most explosive accusations leveled by former clients and some former staff members, including falsely documenting substance abuse, falsifying urine testing and creating and falsifying notes.

Donald Booker, CEO and founder of UYCS, could not be reached for comment for this story. An automated email response from Knicole Emanuel, the lawyer who handled UYCS’s appeal to the state Office of Administrative Hearings, indicated that she will be out of the office with limited access to email through Sept. 20.

A woman who answered the phone at UYCS’s office in Greensboro on Thursday said she thought it was unlikely that anyone from the agency would comment.

“You guys did some fucked shit, so no one is going to comment,” said the woman, who did not identify herself. “Have a great day,” she added, before abruptly ending the call.

Judge Overby’s decision is considered final, but under state law UYCS has 30 days to appeal the decision to state superior court.

Marcus Hyde, a former organizer with the Housing Union of Greensboro who helped bring the abuses to light, expressed measured satisfaction in the decision.

“The court saw enough to know there was rampant abuse and exploitation happening,” said Hyde, who is now pursuing a law degree at City University of New York. “Although I wish a deeper investigation would occur so that clients might have a court record to seek some sort of remedy against UYCS, the court upheld the decision, which hopefully means the irresponsible people who ran this sham of a treatment program will be barred from engaging in further exploitation of vulnerable people.

“Sadly, as we all know, UYCS isn’t the only entity engaging in this type of behavior and until we have better options for people who are low income, many more bad actors will likely step in and do the same bad things UYCS did,” Hyde continued. “But I do hope that none of these specific bad actors remain employed in the poverty pimping industry.”

Michelle Kennedy, a Greensboro City Council member who works with people experiencing homelessness as executive director of the Interactive Resource Center, was called by the state of North Carolina to testify at the hearing, which took place at the Office of Administrative Hearings in Raleigh over five days from May 28 through June 3.

“What I saw with UYCS were vulnerable clients, some with [substance abuse] issues, some without, all of them being treated for [substance abuse], which did not make sense,” Kennedy said in a text to TCB. “All of them were being provided subsidized housing.

“Vulnerable clients were being recruited to participate for the money that could be billed for these [substance abuse] services, and housing was used as the draw,” Kennedy continued.

CEO’s testimony ‘unraveled’ agency’s defense

At the heart of Judge Overby’s decision to uphold the sanctions against United Youth Care Services was testimony about the agency’s violation of state regulations by “linking clients’ housing to their receiving outpatient substance abuse treatment, amounting to serious exploitation.”

Overby said in his decision that “the ultimate question for the allegation of exploitation centers on the solicitation and/or recruitment of clients in order to bill Medicaid, and whether attending classes was required to remain in housing.”

UYCS clients abruptly lost their housing at the Georgetown Manor apartments in June 2019 when their utilities were shut off. During their displacement, a local housing advocate discovered a sign reading, “Attention: If you’re not attending class daily, rent is $350, no exceptions, per Ms. Delores.”

Delores Jordan, who contracted for beds with the property manager for UYCS clients, testified in the hearing that one of her employees created the sign without her knowledge. But Judge Overby said he found that explanation “difficult to believe.”

Overby also cited Michelle Kennedy’s testimony.

“Ms. Kennedy observed first-hand and confirmed that homeless people were being solicited for housing and inquiries were made if the person was receiving Medicaid,” Overby wrote. “Ms. Kennedy saw the sign attributable to Ms. Jordan. The plain meaning of the sign is consistent with what Ms. Kennedy was being told that housing was contingent on attending classes. Failure to attend classes with UYCS meant the rent would not be paid by UYCS and the resident was on his or her own to secure housing. Housing was conditioned on continuing in the programs offered by UYCS.”

Only one former client — Zalonda Woods — was called to testify. The written decision issued by Judge Overby, which redacts Woods’ name, states that “her testimony concerning being solicited for housing and use of her Medicaid benefits was consistent with what was reported by other, including Ms. Kennedy.”

UYCS’s effort to undercut the case for housing exploitation rested on an argument that the entity providing housing was separate from the drug-treatment program.

At the time of the state investigation in August 2019, Donald Booker was the president and CEO of both UYCS and United Youth Care Foundation, Overby noted. “Petitioner took great pains to differentiate the United Youth Care Foundation from UYCS, petitioner herein, to drive home the point that the foundation and petitioner UYCS are two separate and distinct entities and that the foundation was responsible for all things housing,” Overby wrote.

But he added: “It was principally Mr. Booker’s testimony which unraveled and discredited that theory.”

After providing vacillating explanations, Overby wrote that “finally, Mr. Booker clarifies and states that he saw no need for a separate location for the foundation because they were not doing anything with it anyway. He said the foundation was ‘just sitting there… doing nothing… no life… dormant… nothing to separate.’

“With this clarity, Mr. Booker has definitively stated the foundation could not and did not engage in any activity pertaining to housing, or anything else,” until after a state investigator suggested that the two entities should be split, Overby continued.

Judge Overby also wrote in his decision that he found Woods to be “credible in stating that UYCS’ name appeared on the paperwork with which she dealt, and not the foundation.”

Clients’ stories discounted

Despite crediting Zalonda Woods testimony where it concerned the housing arrangements, Overby discounted her statement that United Youth Care Service staff falsely reported that she was using drugs, along with similar statements from other clients to investigators.

One of Woods’ central claims, which was reported in TCB’s initial investigation, was that after being enrolled in the program under the pretense that it was for the purpose of providing housing, she discovered that her case file falsely described her as using cocaine and “drinking a gallon of liquor each day.”

In his Sept. 2 decision, Judge Overby wrote that Woods’ “testimony concerning her drug usage and that staff falsified her records was not credible.”

Woods, who earned a bachelor of arts in interdisciplinary studies from Winston-Salem State University, told TCB on Thursday that she told the truth in her testimony.

“I wasn’t drinking any amount of liquor a day,” Woods told TCB. “They made a false report of cocaine, and they took that out. But they left in the part about a gallon of liquor a day.”

She said that to this day, UYCS has refused to give her a copy of her report, which she said was shown to her and included a forgery of her signature.

“They forged documents in my case,” Woods said. “I don’t know why the judge discounted that. I can prove that. They spelled my name wrong. I know how to spell my name.

“You could easily take my signature on my driver’s license, and compare the two,” Woods added. “You don’t even need my testimony.”

Overby wrote in his decision that “competent evidence” contradicted Woods’ “claims that her assessment was falsified,” citing testimony by Mistor Williams, a licensed clinical addiction specialist who worked for UYCS, Richard Graves, the agency’s program director, and Moutia Yussif, a licensed clinical mental-health counseling associate and licensed clinical-addiction specialist.

Overby also wrote that Woods was “a difficult witness at times.”

Woods told TCB that she found herself butting heads with the judge during her testimony about the nature of the housing arrangement while she was a client of UYCS.

“We were told we were staying on a Medicaid benefit,” Woods said. “I don’t look at it as staying free. The judge wanted me to concede that I was staying there free. I said I didn’t look at it that way because it was a Medicaid scheme. That’s why he called me a difficult witness.”

UYCS has also faced claims from former employees that Clinical Director Sandra Grace encouraged them to create bogus notes for clients who had not attended group classes.

Overby wrote that there was “no credible evidence” that Grace or Graves “directed improper billing practices,” and he said they and others who were called to testify by the agency “credibly denied that UYCS encouraged staff to maximize billing, write notes on people who were not there, and falsify diagnoses.” He said “staff credibly denied the allegations of a former staff member that UYCS would forge signatures and write therapy notes without seeing clients.”

Judge Overby noted that “not a single former staff member testified” for the Division of Health Service Regulation and that the state investigative report withheld their names.

“That may be understandable for purposes of the [Statement of Deficiencies], but our system of laws is built upon the premise that individuals have a right to confront their accusers,” Overby wrote. “One cannot simply hide in the weeds and lob bombs which are severe enough to cause the closure of a business and not expect to have to defend those accusations.”

Kathy Young, one of the state investigators, referred TCB’s question about why the Division of Health Service Regulation did not call the former employees to testify to Barbara Perdue, the North Piedmont mental-health team leader at the state Mental Health Licensure and Certification System. Perdue declined to comment, while referring questions to Erin Gibbs, the assistant attorney general at the NC Justice Department who represented the state in the hearing. Gibbs did not return multiple phone messages for this story.

Judge Overby also discounted findings by the state investigators based on statements by clients and former clients that UYCS tampered with urine tests.

Again citing Grace, Graves and other employees called to testify by UYCS, Overby wrote that “there is no competent evidence to support that UYCS asks clients to lie about using drugs or to falsify urine tests to ensure a positive test” and that “sworn testimony showed that the allegations that UYCS arranged for false positive urine screening in order to keep clients in the program were not substantiated.”

Scott Walton, a state investigator, testified that he interviewed dozens of clients in his review of UYCS’s practices. But Judge Overby noted that only one, Woods, was called to testify.

“All other reports are hearsay, and although accepted into evidence by being included in the Statement of Deficiencies, such hearsay statements are given the appropriate weight,” he wrote. “The credibility of some of those reporting was questionable, which is indicative of the necessity for subjecting reporters to examination and cross-examination.”

Gibbs, the assistant attorney general at the NC Justice Department, did not respond to inquiries from TCB as to why the state did not call additional former clients to testify.

Kennedy said the state might have been reluctant to build a case on the testimony of clients whose history of behavioral health and, in some cases, substance abuse, would make their credibility easy to undercut.

“UYCS deliberately preyed on the most vulnerable people in our community, people who would not be believed if they complained — prime targets for exploitation,” she said. “Desperate for housing, willing to say whatever was needed to get it.”

Woods said she also suspects that UYCS took steps to compromise former clients’ credibility after the state investigation.

“[The former clients] were being bought out,” she said. “They received apartments to stop participating in the investigation. Some were intimidated. Some of them were embarrassed and did not want to have their names put out there.”

While discounting the serious charges by former clients and some former staff about falsifying substance abuse and improperly billing Medicaid, Overby did confirm failures by UYCS to properly complete assessments and treatment plans, as well as discharge plans.

“No former client or current client testified in this contested case hearing concerning assessments,” he wrote. “However, the lack of proper documentation was substantiated in the record reviews and observations.”

Likewise, Overby noted that the Division of Health Service Regulation found that UYCS failed to “complete a discharge plan and refer each client who has completed services to the level of treatment or rehabilitation as specified in the treatment plan.” Referencing Walton’s interviews with former clients, Overby said, “Even though those interviews are hearsay, they corroborated what Mr. Walton found in the record reviews.”

Grace, as clinical director, was responsible for clinical oversight, but told the judge that Constance Polite, as quality assurance director, was delegated the task of reviewing and assuring the accuracy of the records.

“There was no explanation of why the records were missing,” Overby wrote.

An unusually high number of clients

United Youth Care Services served up to 200 clients at one time. Scott Walton, the state investigator, testified that it was unusual for outpatient programs to have hundreds of clients, although Judge Overby’s decision takes pains to state that there is no evidence that enrolling such a large number of clients is improper or illegal.

Overby wrote that by the time of the hearing in late May and early June, UYCS’s client population had dropped to 20, adding, “The diminution of the population was most likely in large part due to the suspension of admissions and the notice of intention to revoke. There is no indication that it was a voluntary reduction in size.”

There’s also no evidence that UYCS intends to shut down.

“Based on past performance, I wouldn’t be surprised if they changed names, registered agents, etc.,” Kennedy wrote in a text to TCB on Thursday.

Woods said she is sure of it.

“They already have a new company,” she said. “They’ve started other companies in other states. There are six or seven of them going from state to state making millions of dollars.”

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