By Eric Heinz
According to an email sent to employees of Sovereign Health, a behavioral health treatment center based in San Clemente, the company said it would close, and it will not be paying its employees.
“As you are aware, Sovereign Health experienced a substantial downturn in revenue over the past year. While we attempted to secure funding to keep the business operating, we’ve been unsuccessful,” the letter stated. “I can assure you, our senior management team and I turned over every rock in seeking financial assistance, but at this point, given the lack of resources to make payroll over this extended period, I cannot, in good conscience, ask you to continue working for no pay.”
Calls to Sovereign Health’s public relations team were unsuccessful on July 12, as the numbers would not go through. The letter stated that employees were to turn over all company property at the end of the day, though the letter obtained by the San Clemente Times was fractured and a date of when it was issued could not be read.
The letter continued to say that while the company does not have the funds to pay employees at this time, they are working with the California Department of Labor (DOL) regarding payroll and benefits. It also mentioned the DOL is in the midst of an investigation of Sovereign Health, which is already under one investigation by the Federal Bureau of Investigation.
“Sovereign understands its obligations to make payment of wages and any accrued entitlements, such as paid time off,” the letter stated.
In 2017, FBI agents raided Sovereign Health locations in San Clemente, including its toxicology lab and the home of its CEO, Tonmoy Sharma.
The company has been under scrutiny since multiple reports came out about how much Sovereign Health has charged insurance companies for behavioral health services. Some of the charges reported topped $100,000 for certain treatment.
The theory is that once a patient’s insurance runs out or if the insurance company refuses to pay claims, the treatment center will no longer provide services to the client, leaving them to fend for themselves if no immediate family or friends take them in.
Several former employees of Sovereign Health emailed SC Times in the weeks leading up to Sovereign Health’s closure stating they hadn’t been paid in months.
The FBI has not yet disclosed the nature of its investigation in 2017. Sovereign sued the health insurance provider Health Net in August, claiming it was the agency to blame for the FBI raids. Sovereign alleged that Health Net owed it more than $55 million in insurance claims it hadn’t paid.
Sovereign Health is an international player in the behavioral health treatment market, with locations throughout California and even India. They provided outpatient drug addiction treatment for thousands of clients.
This is a developing story. More information will be provided when it becomes available.