Addiction Recovery Care closes five more locations, including flagship in Louisa
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Addiction Recovery Care
Allegations against Kentucky’s largest drug rehab center, Addiction Recovery Care, claim that it knowingly falsified medical records to collect millions in Medicaid payments.
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Kentucky’s leading for-profit residential addiction care treatment company is closing five residential centers, including its flagship location, administrators confirmed Wednesday.
Addiction Recovery Care told staff this week it was closing five locations effective immediately, which has resulted in the layoffs of dozens of employees, though ARC declined to provide a specific number in an email to the Herald-Leader.
This week’s layoffs and facility closures are the latest in a tumultuous year for the addiction treatment giant, which, at its peak, was one of the largest addiction treatment providers in Kentucky. In 2023, when elected leaders boasted that Kentucky had the most residential addiction treatment beds per capita of any state, it was in large part thanks to ARC’s expansive footprint.
But as the FBI continues its investigation into ARC for potential criminal fraud, which was announced in August 2024, hundreds of employees have been terminated — ARC won’t say exactly how many — and more federal cuts to Medicaid loom on the horizon. ARC announced more layoffs in August.
The most recent facilities to close are:
- Karen’s Place, ARC’s flagship women’s facility in Louisa that opened in 2010
- Lackey, a men’s facility in Louisa
- May Hill, a men’s facility in Louisa
- Hazel Hills, a women’s facility in Owingsville
- Lydia’s House, a women’s facility in Benham
ARC, and its nonprofit arm Odyssey, Inc., have operated roughly 40 addiction treatment and behavioral health facilities across the state, as well as several public-facing businesses, including a college, an auto shop, an event space, a café and bakery, and a theater.
After this week’s closures, ARC has 14 operational facilities — a mix of residential and outpatient centers, as well as a psychiatric hospital, Bellefonte Hospital and Recovery Center in Ashland, ARC’s Vice President of Marketing Vanessa Keeton said in an email.
Administrators cited “impending and significant reimbursement cuts for addiction and mental health service providers like ARC” in two emailed layoff letters to staff that were shared with the Herald-Leader.
Those letters start by touting ARC’s accomplishments before quickly pivoting.
“Unfortunately, and due to circumstances that are outside of our control, we sometimes have to make difficult decisions that impact members of our team, such as the unfortunate reduction in force that has taken place today,” the letter continues. “We regret to inform you that your employment will be eliminated due to the reduction in force. Your last day of employment will be at the close of business on September 10, 2025.”
Administrators over the last year have said the closure of facilities and cleaving of staff are not related to the FBI probe.
“These decisions were not made lightly, and we are dedicated to supporting our team members and communities affected by these changes,” Keeton said in a statement Thursday morning.
“The safety and care of our clients remains our top priority, and we are ensuring all current clients receive uninterrupted care by transitioning them to other ARC centers or alternative providers of their choosing,” Keeton added, and “given the substantial reimbursement cuts for addiction and mental health services, we cannot determine if these closures are permanent.”
Many of the clients and interns who were currently receiving addiction treatment services at those locations were transferred to other facilities within the ARC system.
But others left ARC or addiction treatment all together, according to two former employees at Hazel Hills who both received termination letters Wednesday and who agreed to be interviewed on the condition their names not be used for fear that they, or those they still know living at ARC, will face retaliation.
They knew of two ARC staff members who were laid off with nowhere to go who had begun calling homeless shelters and sober living homes for help.
“I went to bed last night crying, because we can’t help them,” one of the former employees said.
In dozens of interviews over the last year, current and former ARC employees have described an exploitative workplace culture, where staff and client well-being often takes a back seat to billing the insurance for services rendered of clients on Medicaid. That continued yesterday at Hazel Hills, according to the two women, who had been at ARC either as a client or staff since 2022.
They were both told Wednesday just before 11 a.m. they were being laid off, according to the time stamp of their emails.
“Instead of comforting the clients that are having to move further away from their families, from their kids, instead of consoling those clients, we was told we had to get clients into clinical groups, so they could have their billing done for the day,” the first said. “That was the number one worry is we had to get their groups in before they left.”
“Groups” are peer-support sessions and lessons required as part of treatment programming.
“It was chaos,” the second former employee added. “We were trying to comfort the girls, and we couldn’t even do that.”
Neither were allowed to clock in or out yesterday because they’d already been kicked out of the system, leading them to believe that they won’t be compensated for their final day of employment.
This story may be updated.
This story was originally published September 11, 2025 at 12:40 PM.
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