Addiction Recovery Care faced another setback Friday after a federal judge in Manhattan ordered most of the Kentucky-based treatment provider’s liquid assets to be frozen as part of an ongoing lawsuit.
Already under FBI investigation since 2024 and dealing with widespread facility closures and layoffs over the past year, U.S. District Judge George Daniels ordered a freeze of $4.7 million from ARC’s bank account. That amount represents most of the $5.7 million the company said it had remaining in a previous court filing.
ARC and its owner, Tim Robinson, were sued last week by Angelica Capital Trust, which alleges the company defaulted on a loan repayment. Angelica loaned ARC $5.4 million in November, with ARC stating it would repay the loan using $8.1 million in tax credits it expected from the IRS in December. The lawsuit claims ARC instead kept the tax credits and continued spending them rather than repaying the loan.
Under the judge’s order, ARC is allowed to retain $1 million in its account to cover “daily operating expenses.”
A spokesperson for ARC did not immediately respond to a request for comment regarding the ruling.
The Kentucky Lantern previously reported that Angelica’s lawsuit also alleges ARC engaged in “massive” Medicaid billing fraud and is attempting to raise roughly $28 million for a federal civil settlement.
In October, ARC announced that Florida-based Ethema Health Corporation had signed a letter of intent to purchase its Kentucky treatment facilities. At the time, Ethema’s CEO told Kentucky Public Radio that part of the sale proceeds would be used to pay the U.S. Department of Justice as part of a pending settlement related to the Medicaid fraud investigation, though he later said he may have misspoken.
In early January, Ethema announced that both companies had mutually agreed not to move forward with the deal.
When the FBI investigation was revealed in the summer of 2024, ARC operated more than 30 addiction treatment facilities across Kentucky, making it the state’s largest provider. Since then, closures and layoffs have significantly reduced that number. ARC announced in September that it would close five additional facilities and lay off more staff, leaving the company with just 14 locations statewide.
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