State officials in Texas and Louisiana have launched multiple probes into the Cenikor Foundation following an investigation that found the prominent drug rehabilitation centre turned patients into an unpaid labour force for private companies.

Reveal from The Center for Investigative Reporting found the nonprofit sent thousands of patients to work without pay at hundreds of for-profit companies over the years – including Exxon, Shell and Walmart – in likely violation of federal labour law, according to former federal labour officials.

Louisiana Attorney General Jeffrey Landry is investigating Cenikor for possible Medicaid fraud. The programme receives Medicaid funding and has received millions of dollars in state contracts for behavioural health services. A spokesman declined to comment on the investigation but said, “If there’s evidence of a crime that involves Medicaid, that’s something our office takes a strong interest in.”

In addition to government investigations, former patients are suing the programme for back wages in four separate lawsuits, and two of Cenikor’s biggest work contracts have stopped using workers from the programme.

Louisiana State University has stopped staffing school cafeterias with Cenikor workers. A spokeswoman for Chartwells Higher Education Dining Services, the subcontractor that hired Cenikor, said the company requires vendors such as Cenikor to follow “all federal, state and local labour laws”.

Brand Industrial Services, which previously dispatched Cenikor patients to work at oil refineries and chemical plants, also has stopped using workers from the programme.

“It is our expectation that our suppliers comply with all applicable laws and regulations,” said spokeswoman Karla Cuculi. “We are currently evaluating the use of Cenikor as a temporary labour source.”

Alleged exploitation, abuse

The investigation found a host of problems at the lauded rehab centre. Former staff said participants often worked such long hours that they rarely received the counselling they needed. Under pressure from Cenikor leadership, some staff said they falsified paperwork to make it appear as though clients got more counselling than actually took place.

In addition to long work days, many also frequently worked in unsafe conditions and were injured on the job. More than two dozen Cenikor patients have been seriously hurt at work, including one injury that resulted in a patient’s death.

Courts across Texas and Louisiana send defendants to Cenikor for drug treatment, often as an alternative to imprisonment. Some former patients have defended the programme, saying it helped them and was better than being homeless or jailed.

But this month, dozens of former participants joined lawsuits against Cenikor and came forward with allegations of exploitation and abuse. Last week, a former participant added a new wrinkle in a fourth lawsuit, accusing Cenikor staff of benefiting from unlawful kickbacks.

The lawsuit, filed by former participant John Potter, alleged the wages earned by rehab participants went to the salaries of Cenikor staff.

“It was just a work camp to get out of jail. No recovery at all,” Potter said in an interview. He said he first enrolled in Cenikor’s Baton Rouge, Louisiana, programme when he was homeless and addicted to pain pills. “It’s a big scam of a place.”

In a statement, Cenikor said it follows state regulations. The programme declined to comment on the business contracts, investigations or lawsuits.

“As a matter of policy and regulation, we are prevented from speaking on behalf [of] partners, regulators, or on human resources matters,” the statement reads. “However, we fully cooperate with, and in many instances, go beyond regulatory compliance requirements.”

‘Very disturbing’

In Texas, the Health and Human Services Commission is investigating allegations of abuse, neglect and exploitation at Cenikor, as well as worker injuries. Representative Garnet Coleman said he also is asking the commission to investigate whether Cenikor violated its contracts with the state, which have earned the programme more than $26m since 2009, according to public records.

“The facts that you’ve presented are very disturbing. It’s not right,” Coleman said. “We need credible substance abuse treatment centres. And we need them badly.”

At the Texas Workforce Commission, spokeswoman Lisa Givens urged unpaid workers to file claims for wages. “The TWC encourages any Texas worker who feels they have not been paid for work that they’ve done to contact us so that we can offer assistance,” Givens said.

The Louisiana Workforce Commission, which enforces labour law in the state, is “conducting a full investigation into this matter”, a spokesman said.

Both agencies have asked the US Department of Labor to investigate whether Cenikor is violating federal law.

A spokeswoman for Louisiana Governor John Bel Edwards, who recently accepted an award from Cenikor for “elected official of the year”, said the governor is “concerned about any allegations of mistreatment of those seeking help”.

Edwards said he was confident the Department of Health would investigate any complaints.

‘Comprehensive investigation’

But as many state agencies launch what will likely become lengthy probes into Cenikor, the Department of Health already swiftly cleared Cenikor.

The department regulates drug rehab centres in the state and can issue fines and revoke the licences of treatment providers that are abusive, exploitative, or do not follow licensing requirements, such as reporting injuries. It’s the one agency assigned to ensure the safety of people struggling with addiction who seek out help.

After spending two days at Cenikor, the department closed its investigation and gave Cenikor permission to continue providing treatment services.

Records released Monday show department investigators found Cenikor failed to conduct background checks on certain staff and that the kitchen was physically unsafe for residents.

A department spokesman said two nurses were assigned to conduct the two-day investigation, which involved reviewing records and interviewing participants and staff at Cenikor’s facility.

“After this comprehensive investigation that not only reviewed the appropriate licensing standards, but also issues that you brought to our attention, we cited the facility for all deficiencies that we could verify. You now have that report,” said spokesman Robert Johannessen.

In response to questions following the report, the governor’s office said it directed the health department to work with the Workforce Commission and other government agencies “to look further into the allegations that have been raised”.

Amy Julia Harris contributed to this report

Follow Shoshana Walter on Twitter: @shoeshine