A Newport Beach-based chain of rehabilitation centers that had been under fire from state regulators for years has agreed to pay a $75,000 settlement and limit its control over residents in its sober-living homes.

Until Tuesday, Morningside Recovery had been battling the state in court over allegations that it was running unlicensed residential addiction treatment centers in Orange County.

The California Department of Alcohol and Drug Programs argued that Morningside essentially combined its seven sober-living homes in Newport Beach and Costa Mesa with three licensed rehab homes and an outpatient treatment center in Costa Mesa to skirt licensing requirements.

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Group homes for recovering addicts do not require state approval, but residential facilities that offer recovery treatment must be licensed.

Under a settlement signed in December, Morningside agreed to draw a clear line between its sober-living facilities and outpatient treatment.

"Under the terms of the settlement agreement, Morningside will stop requiring clients who stay at its residential locations to participate in treatment services offered at its non-residential clinic," said Carol Sloan, a spokeswoman for state Department of Health Care Services, which absorbed the California Department of Alcohol and Drug Programs.

No longer will there be "package deals" for recovery treatment and lodging in one contract, according to the agreement.

Morningside is not even allowed to use the words "residential treatment" or "residential rehabilitation" when referring to itself, according to the terms.

The $75,000 settlement will be paid to the state. The pact also requires that the rehab chain refrain from managing its clients' schedules, prescriptions and access to personal belongings.

In 2012, the state revoked Morningside's licenses to operate the three residential treatment centers in Costa Mesa, alleging it mismanaged prescriptions and offered medical services it wasn't authorized to perform.

But the settlement allows Morningside to keep its separate license for outpatient treatment, as long as it complies with probationary requirements.

The authorization can be revoked at any time during the next five years if Morningside breaks any conditions of the settlement. It must also submit to unannounced inspections by regulators.

Morningside and the Department of Health Care Services agreed to the terms last year, and a judge Tuesday dismissed the case that had been working its way through Orange County Superior Court since 2012.

Another case involving Morningside ended this week when the organization dropped its appeal of a ruling instructing it to move all of the company's homes out of Newport Beach.

The location of group homes in residential neighborhoods violated the city's municipal code, according to an Orange County Superior Court judge, and Morningside agreed to move its sober-living operations to nearby cities, including Costa Mesa.

A lawyer for Morningside, Ron Talmo, declined to comment on either case, and management did not return a call from the Daily Pilot. But Morningside has previously denied using its chain of sober-living homes as de-facto addiction treatment centers.

"All of the treatment that Morningside provides is rendered at its 6,300-square-foot clinical facility, rather than in residential homes," former Chief Executive Mary Helen Beatificato said in 2012 in response to criticism from a state report that called Morningside a "rogue rehab."

The report alleged that, like hundreds of other rehab centers in California, Morningside was offering medical care without proper oversight.

The document highlighted the death of Brandon Jacques, saying the 20-year-old Missouri man died shortly after he was in Morningside's care, where he was getting treatment for bulimia and alcoholism.

Morningside denied any culpability.