A federal judge in New York issued judgments in two lawsuits against Kentucky treatment provider Addiction Recovery Care this week, ordering the belleaguered company to pay more than $18 million to creditors.
This comes on the heels of a calamitous summer for the company, known as ARC, which agreed to a $16.2 million settlement with federal prosecutors related to allegations of Medicaid billing fraud and had its founder and now-former CEO Tim Robinson indicted for an allegedly fraudulent money laundering scheme.
Angelica Capital Trust and Clear Cove Opportunities Fund both sued ARC at the beginning of this year for defaulting on promised payments for loans given to ARC the previous year. As the federal felony indictment against Robinson laid out this summer, the company allegedly promised the same future IRS tax refund to both companies in return for millions of dollars in loans, and then started spending it instead of turning over the refund.
A judge previously froze $4.7 million of ARC assets in its bank account, while the two creditors disputed how much each was owed for the same promised payments.
In four separate rulings issued Wednesday, U.S. District Judge George Daniels ordered ARC to release the $4.7 million of frozen assets to the companies, in addition to awarding $3.9 million of damages to Clear Cove and at least $9.8 million of liquidated assets to Angelica Capital Trust per an arbitration ruling, including interest.
Asked about the rulings, ARC spokesperson Vanessa Keeton said they “represent another step toward resolving this matter.”
Once the largest addiction treatment provider in Kentucky, ARC has fallen on hard times since the summer of 2024, when the FBI announced it was investigating the company for potential Medicaid billing fraud.
ARC had more than 30 treatment facilities throughout Kentucky when the investigation was announced, but subsequently had massive layoffs and closures. ARC also attempted to sell off most of its assets to a Florida company in 2025, which was aborted at the time of the lawsuits. The website of ARC currently indicates that it now operates just eight facilities in four counties.
ARC was evicted from its Pikeville treatment facility last month for owing nearly $300,000 in back rent and late fees.
ARC and its affiliates are also the subjects of other lawsuits from creditors who say they defaulted on payments, as well as a company who says ARC reneged on a contract to co-own a treatment facility in Ashland. The company recently sold property in Louisa, where it is headquartered, including Masterpiece Kitchen, a catering company that has employed those in its recovery programs. It was purchased by Robinson, its former CEO.
Asked about the sale of the property in August, Keeton said ARC “is moving forward as a healthcare organization focused on the health, wellness, and high-quality treatment of our clients. As part of this direction, ARC is divesting non-core entities and programs that do not directly support its mission. The separation process remains ongoing.”
As first reported by Kentucky Public Radio in March, ARC and the U.S. Department of Justice had an unsigned draft settlement for $27.7 million last year to settle the Medicaid fraud allegations, including fraudulent billing for non-clinical psychoeducation services. KPR also detailed how a new federal database shows ARC was paid $70 million from Medicaid for this psychoeducation service in 2023 and 2024 — which accounted for 20% of all Medicaid payments under that billing code in the entire country for this two-year period.
When the DOJ announced its $16.2 million settlement with ARC in July, its press release noted that the total amount was “negotiated and reduced due to Defendants’ financial condition and prospects for ongoing operations.”
Following KPR’s reporting in March, the Kentucky General Assembly passed a bill into law to prohibit Medicaid from paying out claims billed for psychoeducation services, with the lead sponsor saying it was “overbilled and abused” for hundreds of millions of dollars. Sen. Chris McDaniel of Ryland Heights, the GOP chair of the Senate budget committee, blasted ARC in the runup to that bill.
“There are people in this world who don't care how they make their money, and we have people in this state who have figured out how to make addicts big money, and they've enriched themselves,” McDaniel said.
Robinson, a prominent political donor to both parties, was once heralded as a savior of expanding addiction treatment services in Kentucky, receiving praise from Democratic Gov. Andy Beshear in his 2024 State of the Commonwealth address. Robinson contributed nearly $200,000 to a group that paid for ads helping to reelect Beshear in 2023, as well as $20,000 to a PAC that helped elect Republican Attorney General Russell Coleman that year.
