Feds open investigation into Idaho anti-trafficking nonprofit after reports expose potential fraud

(InvestigateWest) — As more whistleblowers come forward, federal authorities have launched an investigation of an influential Idaho nonprofit accused of exploiting human trafficking victims in a Medicaid fraud scheme.

The alleged scheme involving Community Outreach Behavioral Services, a nonprofit that says it provides trauma care to trafficking victims in Idaho, was exposed in a series of InvestigateWest stories published in early July.

Those articles included accounts from victims and former employees who said COBS founder Paula Barthelmess used manipulative tactics to recruit and keep victims in safe houses. Once there, a for-profit company owned by Barthelmess’ son billed their Medicaid insurance in ways that experts say likely amounted to fraud. Former employees say Barthelmess, a licensed social worker, is in practice the one running both COBS and her son’s company, Advanced Clinical Trauma Services.

The reporting has triggered a probe from the U.S. Department of Health and Human Services Office of Inspector General, which contacted the Idaho Attorney General’s Office days after the articles were published. The state Attorney General’s Office confirmed in a statement to InvestigateWest that it would assist in the investigation.

Barthelmess did not respond to a request for comment. The Idaho COBS Facebook page weeks ago called InvestigateWest’s reporting “slander” and the accusations “false,” without identifying specific inaccuracies.

Barthelmess’ son Tylar Bell, the owner of Advanced Clinical Trauma Services, provided a statement via email that also called the reporting “false.” He said that ACTS “adheres to all applicable laws and regulatory guidelines concerning Medicaid billing,” that the company “recently passed a Medicaid audit with no findings of fraud or unethical billing practices,” and that he’s confident federal investigators will “confirm our compliance, just as our recent Medicaid audit did.” He did not specify which allegations in the previous reporting were false, nor did he provide a copy of the Medicaid audit when asked.

Prior articles reported, based on a detailed analysis of Medicaid records and interviews with former employees and residents, that ACTS billed the Medicaid plans of COBS safe house residents for “targeted case management” for short car rides, which would be a violation of federal regulations.

The HHS Office of Inspector General conducts criminal, civil and administrative investigations, including cases against recent sober home fraud schemes targeting vulnerable populations. The office also has found problems with Medicaid reimbursements for targeted case management in nearly a dozen states across the country in recent years, forcing states to pay the federal government back millions of dollars for unallowable claims.

In 2022, Montana had to pay back $5 million in overpayments, and earlier this year Alabama was asked to refund $5 million in case management overpayments. The auditor’s report from Alabama singled out case management claims for transportation as a common unallowable service under state and federal regulations, noting that some providers should not have been reimbursed for driving clients to appointments, and in one case to the fair for hot dogs and soda.

COBS has been integral to Idaho’s human trafficking response in recent years. The small nonprofit works with local, state and federal law enforcement agencies on Idaho’s first anti-human trafficking task force, which was launched in 2020. Idaho agencies have secured more than $1 million in federal grant dollars to fight trafficking since then, based in part on the victim services COBS said it provides. COBS receives a small portion of that money to provide emergency beds and hold public training sessions.

Victims who are caught in the criminal justice system — often for crimes related to having been a victim of trafficking — are sent to COBS safe houses on probation orders. Several former safe house residents and employees said, however, that COBS isolated and controlled trafficking survivors and that the residents were expected to boost COBS’ reputation publicly or risk being sent back to jail in retaliation.

Idaho state Sen. Melissa Wintrow, a member of the Idaho governor’s Human Trafficking Subcommittee, said the state should rethink its approach of court-mandating human trafficking victims to programs like COBS.

“Victims have already been exploited. They’ve already been traumatized, they’ve already been tricked, manipulated, mandated, threatened,” said Wintrow, D-Boise. “We should not be in that business of potentially and unintentionally re-traumatizing through another mandate.”

Despite InvestigateWest’s reporting, state and local law enforcement agencies on the human trafficking task force with COBS have defended the organization. The Idaho State Police said in a statement to InvestigateWest that it “does not have a statement” about the series and that “current assertions have not impacted our work or interaction with COBS.”

The Nampa Police Department, which has worked closely with COBS on sting operations and is also on the task force, declined to answer whether it would continue partnering with the nonprofit. Nampa police spokesperson Carmen Boeger said in response to InvestigateWest that she’d “visited with leadership in our Persons’ Crime Unit and there is inaccurate information in your series of articles.” She did not respond to email or phone messages asking to specify what information was inaccurate.

Homeland Security Investigations, an agency within the U.S. Department of Homeland Security, is part of Idaho’s human trafficking task force along with COBS. But Steven Schrank, deputy special agent in charge of Homeland Security investigations in the Pacific Northwest, emphasized that it has never had a formal agreement with COBS and said the agency has not had “direct dealings” with COBS in “a number of years.”

While Schrank said the agency did not notice red flags with COBS previously, he’s “concerned” about the allegations raised in the reporting.

“I do look forward to those that have oversight conducting an appropriate investigation and getting to the bottom of the matter,” Schrank said. “We do need to work with the non-government organizations that are in the area and find the appropriate services, wherever they are, as long as they are operating appropriately.”

More whistleblowers speak out

Two former ACTS case managers now coming forward in interviews with InvestigateWest offer a more detailed picture of the way they were told to bill the Medicaid plans of trafficking survivors in order to maximize profits. Fearing retaliation as whistleblowers, they requested anonymity for this article.

ACTS was formed in 2020 just as Barthelmess and COBS opened its first safe house for trafficking victims. Residents of the safe house said they were expected to receive therapy services from ACTS, including from Barthelmess herself. That arrangement would be considered a self-dealing scheme that could threaten Barthelmess’ license as a social worker, experts have said.

ACTS received nearly $2.6 million in Medicaid reimbursements from 2020 through April 2024, though that may include reimbursements for some clients who didn’t stay in a safe house.

The billing code that brought ACTS the most money was for targeted case management. But as InvestigateWest previously reported, residents said they received little case management. By Barthelmess’ own admission, ACTS would submit reimbursement claims for case management for transporting safe house residents around town, often for outings residents said they had no choice but to go on.

One former case manager who worked at ACTS in 2024 said Barthelmess expected them to spend workdays driving clients around and logging it as case management or as psychosocial rehabilitation services.

“The vast emphasis was on rides. It almost was like there were so many rides from morning to night that there was no time to do case management,” the former employee said.

That former employee said she spent 10 or more hours per day in her car driving clients to appointments, waiting in the parking lot for them to finish, then driving them back to the safe house. She added that clients were sometimes billed by multiple case managers for times that didn’t align with the times that case management was provided. She provided InvestigateWest with redacted screenshots of group texts that include Barthelmess, along with assigned schedules for ACTS and COBS employees, which show that workers spent much of their day giving clients car rides.

She said she was told to bill for the entire time under one of the two codes, including the time in the parking lot. She noted that some of those appointments were with counselors that also billed the residents’ Medicaid.

“They go and sit and wait during a counseling session, and then bring them back when they’re done — probably billed for two and a half, three hours during that time,” the former employee said.

Her account matches that of a second whistleblower, who spoke to InvestigateWest in a separate interview. She described the same kind of schedule for case managers centered on logging car rides as case management or psychosocial rehabilitation services for Medicaid.

“It was obviously very illegal. It’s fraudulent,” she said.

Both former employees told InvestigateWest that they voiced concerns to Barthelmess and ACTS management within the last year about the organization’s billing practices and potential violations of the federal Health Insurance Portability and Accountability Act, or HIPAA.

None of these practices were standard at other case management jobs they’d worked, they said.

Barthelmess dismissed their concerns, they said, telling them she’d cleared everything with Medicaid. “That’s fine. Bill as much as possible,” one of the former ACTS employees remembered Barthelmess saying.

“I went there broken, and Paula broke me even more.”

But after InvestigateWest published its investigation, Barthelmess stopped telling staff that she’d cleared the billing practices with Medicaid and instead told them they must have misunderstood her instructions, the former employee said.

That’s when the employee became convinced the dubious billing practices were intentional, she said. “It’s like, ‘Do you guys think I’m stupid? You literally told me differently before.’”

She quit her job at ACTS after Barthelmess failed to address her concerns about the program’s practices, she said.

Apart from the billing practices, former employees and clients emphasize that the program fails to meet the needs of many of its clients.

Veah Netherton, a sex trafficking survivor who lived at a COBS safe house in 2021, agrees with other residents who previously told InvestigateWest that the program was like “being trafficked all over again,” she said.

Barthelmess played favorites, she said, selectively enforcing her ever-changing rules and punishing those who broke them.

“Unless you’re her favorite, you know you’re at the bottom,” said Netherton, 27.

It’s a power structure that mirrors that of traffickers, with Barthelmess at the top of the hierarchy, survivors and former employees say.

“It’s very much like a cult. You got your leader, you got to please the leader,” one former ACTS employee said. “She will manipulate them to no end. And every single one of them thinks the other’s her favorite, and they’re all trying to become her favorite.”

Netherton, who had come to the program seeking help for an eating disorder, was unhappy at COBS, but she had nowhere else to go — a fact that she says Barthelmess used against her. “Every time I challenged her beliefs or I did something that she disagreed with, she would threaten my living space,” she said.

Netherton continued pushing back against Barthelmess’ rules. Finally, after about two months, Barthelmess kicked her out of the safe house, Netherton said. Her eating disorder had only gotten worse while at COBS, and now she was homeless.

“I went there broken, and Paula broke me even more,” said Netherton, who has since recovered from the disorder and moved to a different state. “And that’s sad, because if Paula actually used her job for good, she would really make a difference. If somebody really used that for good, imagine all the lives they could actually change.”

InvestigateWest is an independent news nonprofit dedicated to investigative journalism in the Pacific Northwest. Reach investigative reporter Kelsey Turner at kelsey@invw.org. Reach news and investigations editor Wilson Criscione at wilson@invw.org.