Who oversees what

Oversight of SUD treatment and recovery housing is split across four levels of government. Each one holds different tools. Brokering schemes are built to sit in the gaps between them.

Federal

EKRA, 18 U.S.C. § 220 (2018).Criminalizes soliciting, receiving, paying, or offering remuneration for referrals to a recovery home, clinical treatment facility, or laboratory, for services covered by a "health care benefit program" as defined in 18 U.S.C. § 24(b). That definition includes private plans, which is the main difference from the AKS. EKRA's definition of "recovery home" covers shared living that is, or claims to be, substance-free and peer-centered, whether or not the state licenses it. [1]
Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b).Applies to items and services payable by federal health care programs. [2]
DOJ and U.S. Attorneysprosecute. HHS-OIG investigates federal program fraud, issues exclusions, and certifies and partly funds state Medicaid Fraud Control Units. [3][11]
CMSsets Medicaid rules. Section 1115 SUD demonstrations require states to use evidence-based, SUD-specific placement criteria; ASAM is the example CMS names. [28]
FTC.The Opioid Addiction Recovery Fraud Prevention Act of 2018 (15 U.S.C. § 45d) bars unfair or deceptive practices for SUD treatment services, defined to include referrals, treatment, and recovery housing, and lets the FTC seek civil penalties. Its first case was R360 (2022), a referral network that claimed to vet centers it did not vet. A later complaint targeted search ads that impersonated other facilities. [4][5]
SAMHSAfunds states through block grants, sets guidance, and certifies opioid treatment programs under 42 C.F.R. Part 8. It does not license treatment programs or recovery residences. [6]

State

Licensing agencies:CA DHCS, FL DCF, AZ ADHS, PA DDAP. [7][8][9][10]
State brokering and inducement laws:Fla. Stat. § 817.505; A.R.S. § 13-3730; Cal. Health & Safety Code §§ 11831.6 and 11831.65. Pennsylvania relies on Act 59 recovery house rules (28 Pa. Code ch. 717), Medical Assistance kickback provisions, insurance fraud law, and EKRA. See the Policy page.
Insurance fraud units(for example, the California Department of Insurance Fraud Division) and MFCUs, usually housed in the state AG's office. [11]

County

Behavioral health departmentscontract with and fund providers. In California's Drug Medi-Cal Organized Delivery System, counties such as Los Angeles (DPH-SAPC) contract with DHCS-certified providers. Pennsylvania routes state and federal funds through Single County Authorities. Florida routes publicly funded care through regional managing entities. [12][13][20]
County prosecutorsbring state brokering and insurance fraud charges. The Palm Beach County grand jury (2016) and the State Attorney's Sober Homes Task Force shaped Florida's 2017 reforms. [14][15]

City

Zoning, building and fire code, nuisance, and code enforcement.In California, a licensed residential treatment facility serving six or fewer people must be treated as a residential use for zoning (Health & Safety Code § 11834.23). [29]

Why recovery housing is regulated as housing

People in recovery who are not currently using illegal drugs are people with disabilities under the Fair Housing Act (42 U.S.C. § 3602(h), from the Fair Housing Amendments Act of 1988) and the ADA (42 U.S.C. § 12210). Alcoholism is covered. [16][17]

So a sober home that provides only housing is a dwelling, not a facility. Local governments can apply neutral rules that apply to every group of unrelated people. They cannot impose permits, spacing rules, or conditions only on homes for people with disabilities, and they must consider reasonable accommodation requests. A facially neutral ordinance can still violate the FHA if it was passed to exclude group homes. That was the holding in Pacific Shores Properties, LLC v. City of Newport Beach, 730 F.3d 1142 (9th Cir. 2013). [18]

Note on federal guidance: The 2016 HUD/DOJ Joint Statement on land use and the Fair Housing Act was the main federal guidance on this. HUD withdrew it effective September 25, 2025 (Federal Register notice, July 17, 2026). The statute, the ADA, and the case law still apply. Cite those, not the Joint Statement, as current authority. [30]

The tension is real. Those protections stop neighborhoods from excluding people in recovery. They also mean a house that offers "only housing" usually has no regulator, which is where brokers place patients. States differ:

California:no state license for housing-only sober living. A home that provides treatment services needs a DHCS license. Voluntary certification through CCAPP Recovery Residences. Licensed and certified programs must disclose to DHCS any ownership, control, or financial interest their principals hold in a recovery residence (H&S § 11833.05). Housing they own or manage must run on a separate contract (§ 11831.65). [8][34][35]
Florida:voluntary certification (FARR, Fla. Stat. § 397.487). Under § 397.4873, licensed providers may not refer patients to or accept referrals from uncertified recovery residences, with exceptions. [19][20]
Arizona:mandatory ADHS sober living home licensure, A.R.S. § 36-2062. The standards cover drug testing practices, finances, medication-assisted treatment, and a ban on making residents sign over public benefits. [21]
Pennsylvania:DDAP licensure of drug and alcohol recovery houses that receive public funds or state or county referrals (Act 59 of 2017). [10]

Resident tenancy (California)

California's landlord-tenant chapter applies to "tenants, lessees, boarders, lodgers, and others, however denominated" (Civ. Code § 1940). It excludes hotel-type transient occupancy subject to transient occupancy tax, which applies only to stays of 30 days or less. [31][32] The California Attorney General's 2022 law enforcement bulletin says tenants may be removed only by a sheriff or marshal after a court judgment and writ of possession. It says police should not help with lockouts, and that the narrow lodger exception (Penal Code § 602.3) applies only to a single lodger in an owner-occupied home. [22][25] Lockouts, utility shutoffs, and removal of belongings carry civil penalties under Civ. Code § 789.3. [24] We found no California statute or appellate decision that specifically classifies sober living residents. Status depends on the facts, so officers should consult agency counsel in close cases. In 2023 the Oakland City Attorney sued a sober living operator in part over alleged illegal lockouts. [33]

The gaps brokers use

Housing with no license.Patients are housed where no agency inspects, and an affiliated outpatient program bills their insurance for treatment. Common ownership is often legal. What breaks the law is free rent or other benefits used to get patients to attend, or billing for services that weren't provided.
Out-of-state recruitment.Patients are recruited out of state and away from their support systems, often because out-of-network plans paid more. The 2016 Palm Beach grand jury found out-of-state patients were targeted for this reason. [14]
Split oversight.A licensing agency can act on a license but not on a kickback. A prosecutor can act on a kickback but not on a housing condition. A city can act on code violations but cannot target a house for who lives there.
Victims who don't report.The grand jury found patients rarely report because they receive free rent and other benefits, and many distrust police. [14]