Rehab Owner Pleads Guilty in Connection With $175 Million Insurance Fraud Scheme

The co-owner of a company that operated drug and alcohol treatment centers in Southern California and Colorado pleaded no contest Monday to 14 felony counts in connection with a $175 million insurance fraud scheme.

In a deal negotiated with prosecutors, Christopher Bathum, 58, entered his plea to seven counts of grand theft, five counts of insurance fraud and one count each of identity theft and money laundering, according to the District Attorney's Office. He faces 20 years in prison, with sentencing set for Feb. 14.

Whatever sentence he receives would run concurrent with any prison time ordered for his 2018 conviction in a sexual assault case, according to a spokesman for the D.A.'s office. Bathum was convicted of 31 counts -- including the sexual assault or exploitation of seven patients and offering controlled substances, but his attorney is arguing that the conviction should be vacated.

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Bathum's attorney has filed a motion alleging that prosecutors withheld exculpatory evidence and introduced perjurious testimony during the trial. Prosecutors have filed a counter motion denying misconduct.

If the conviction in the sex case stands, Bathum faces a maximum possible sentence of roughly 65 years in prison and lifetime sex offender registration.

Bathum and his co-defendant in the fraud case -- Kirsten Wallace, 46 -- fraudulently billed an estimated $175 million in healthcare claims between June 2012 and December 2015, with about $44 million being paid out by five insurance companies, according to Deputy District Attorney Shaun Gipson.

Wallace -- who co-owned Community Recovery of Los Angeles with Bathum -- pleaded guilty in 2018 to all 46 felony counts against her and was
immediately sentenced to 11 years in state prison.

Prosecutors said the pair obtained multiple health care insurance policies for their clients by using their personal identifying information and falsifying the clients' circumstances to get the policies for patients who were unaware that policies had been issued in their names.

The two also billed for services involving former patients after their treatment ended, according to the prosecutor.

After Wallace and Bathum were arrested in 2016, state Insurance Commissioner Dave Jones called the case "one of the largest health insurance fraud cases in California."