The Federal Trade Commission has taken action against R360 LLC and its owner, Steven Doumar, for deceiving people seeking help for addiction about the evaluation and selection criteria for the treatment centers in their network. The case is the FTC’s first under the Opioid Addiction Recovery Fraud Prevention Act of 2018.
The agency has secured a $3.8 million civil penalty judgment against the defendants and an order prohibiting them from continuing to make the same kinds of misrepresentations.
“Our order stops R360 and its owner from deceiving people about addiction treatment,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We’ll continue to use the authority Congress gave us to go after companies that prey on those suffering from addictions.”
The Opioid Addiction Recovery Fraud Prevention Act of 2018 authorizes the Commission to seek civil penalties for unfair or deceptive acts or practices with respect to any substance use disorder treatment service or product. “Substance use disorder treatment services” are services that purport to provide treatment, referrals to treatment, or recovery housing for people with substance use disorders.
According to the FTC’s complaint, Ft. Lauderdale, Fla.-based R360 LLC began promoting its client treatment centers in 2017 to consumers suffering from substance use disorders using television ads for its “R360 Network,” a supposed nationwide network of addiction treatment and recovery specialists. Consumers who called seeking help were routed automatically to a treatment center that was a member of the network.
The FTC alleges that R360 misrepresented to these consumers that it would connect them with treatment centers that met their individualized needs and were selected through a rigorous evaluation process conducted by an expert in substance use disorders and addiction treatment. In reality, Doumar was responsible for assessing the quality of the treatment centers and deciding which would join the network, and he had no educational or professional experience that qualified him to make these decisions. The complaint states he only did a cursory review of potential members and conducted no research to verify the information that treatment center representatives provided to him.
The proposed order settling the FTC’s charges prohibits R360 and Doumar from misrepresenting any material fact about substance use disorder treatment products or services. This includes claims: that consumers will be directed to a treatment center based on their individualized needs; that a product or service has been endorsed or evaluated by an expert; and about the nature of any criteria used to evaluate products or services. The order also imposes a $3.8 million civil penalty against the defendants, which is suspended based on their inability to pay.
The Commission vote approving the complaint and proposed order was 4-0, with Chair Lina M. Khan and Commissioner Christine S. Wilson issuing separate statements. The complaint and order were filed in the U.S. District Court for the Southern District of Florida.