Arizona Medicaid Suspends Sacred Circles of Healing & Wellness Amid Fraud Investigation

June 30, 2026

An Arizona behavioral health provider serving clients on the Navajo Nation has been suspended from the state's Medicaid program following allegations of widespread fraud, including false billing, patient brokering, and the use of artificial intelligence to generate clinical records. Federal authorities are also investigating the case.

The Arizona Health Care Cost Containment System (AHCCCS) suspended Sacred Circles of Healing and Wellness on June 17 after determining there was credible evidence of Medicaid fraud. According to state officials, the Tuba City-based provider is the subject of an FBI investigation and faces more than 30 allegations outlined in a suspension notice.

The case comes as Arizona continues to recover from a massive Medicaid fraud scheme that targeted Native Americans and is estimated to have cost taxpayers approximately $2.8 billion over the past several years.

State investigators allege that Denis Artiles, the former chief executive of the now-terminated behavioral health provider Newfound Hope, secretly controlled Sacred Circles despite not being publicly identified as its operator. AHCCCS claims Artiles financed the clinic's payroll through another company, provided transportation for clients, and relied on CEO Coleen Chatter to serve as the organization's public face.

Artiles had previously agreed to a settlement with the Arizona Department of Health Services that prevented him from seeking behavioral health licensure through late 2025 after Newfound Hope lost its Medicaid participation. Despite that agreement, AHCCCS later approved Sacred Circles as a Medicaid provider.

According to the suspension notice, investigators found evidence of patient brokering, alleging that the clinic paid $500 bonuses for recruiting Medicaid clients. AHCCCS contends those payments were ultimately made through Artiles, while Chatter allegedly received the recruitment bonuses.

Republican State Senator Carine Werner, who has been outspoken about Arizona's behavioral health fraud crisis, said whistleblowers first alerted her to concerns involving Sacred Circles. She warned that individuals connected to previous fraud cases have exploited regulatory gaps by establishing operations on tribal land, where state behavioral health licensing requirements may not apply, while still receiving Medicaid reimbursements.

Records cited by FOX 10 indicate AHCCCS paid the clinic approximately $294,000 over a six-month period before the suspension.

Investigators also accuse the provider of billing Medicaid for services that either were not delivered or could not have been provided as documented. The suspension letter alleges the clinic billed for clients who failed to attend classes, left early, or had stopped participating altogether. Officials further claim Sacred Circles performed urinalysis testing despite lacking the required medical or laboratory licenses.

Among the more unusual allegations is the reported use of artificial intelligence to create clinical documentation. According to AHCCCS, staff members were instructed to use ChatGPT to generate patient progress notes before copying the material into official records instead of personally documenting services they had provided. Werner said the allegations demonstrate that regulators must also address the potential misuse of AI in healthcare fraud investigations.

The suspension notice also describes alleged safety concerns at the clinic, including claims that an intoxicated individual was permitted to attend programming and that the facility's CEO became involved in a personal relationship with that client. After the relationship reportedly ended, investigators allege the individual returned to the facility carrying a weapon.

Sacred Circles has the right to challenge the suspension through an administrative hearing or seek an informal settlement conference. The allegations remain under investigation, and no criminal charges have been announced.

Source: Justin Lum, "Arizona behavioral health clinic suspended for allegations of Medicaid fraud, ties to terminated provider," FOX 10 Phoenix, June 24, 2026.