Addiction Recovery Care faced yet another blow on Friday, as a federal judge in Manhattan ordered that most of the Kentucky treatment provider’s liquid assets be frozen as part of an ongoing lawsuit.
Already under an FBI investigation since 2024 and facing large-scale closings and layoffs over the past year, U.S. District Judge George Daniels ordered a freeze of $4.7 million in ARC’s bank account — most of the $5.7 million that ARC said it had left in a previous court filing.
ARC and its owner Tim Robinson were sued last week by Angelica Capital Trust, alleging that the company defaulted on the repayment of its loan. Angelica loaned ARC $5.4 million in November, with ARC indicating it would repay the loan with $8.1 million of tax credits they expected to receive from the IRS in December. Angelica’s lawsuit alleges that ARC instead kept and continued spending the tax credits, rather than paying the company back for the loan.
The judge’s order on Friday allows ARC to keep $1 million in its account that can go towards “daily operating expenses.”
A spokesperson for ARC did not immediately return a request for comment on the judge’s order.
The Kentucky Lantern previously reported that Angelica’s lawsuit alleges ARC committed “massive” fraud in its Medicaid billing and is desperately trying to raise roughly $28 million for a federal civil settlement.
In October, ARC announced that Florida company Ethema Health Corporation had signed a letter of intent to purchase its Kentucky treatment facilities. The company’s CEO told Kentucky Public Radio at the time that ARC would use part of the funds from the purchase to pay the U.S. Department of Justice as part of a pending settlement over the Medicaid fraud investigation — though he subsequently said he may have misspoke.
In early January, Ethema announced in a press release that both companies had mutually decided not to move forward with the deal.
When the FBI investigation was announced in the summer of 2024, ARC had more than 30 facilities related to drug addiction treatment throughout Kentucky, by far the largest provider in the state. However, that number has since dwindled with closures and layoffs, with ARC announcing last September that it was closing five more facilities and laying off more staff, leaving it with just 14 facilities.
