MIAMI | Federal authorities charged the nation’s largest chain of community mental health centers Thursday with Medicare fraud, alleging the Miami-based company preyed on patients with severe dementia to bill $200 million for services it never delivered.
Prosecutors allege that American Therapeutic Corp. and its sister companies faked medication and care charts and paid the owners of assisted living facilities and halfway houses to bring patients to their seven mental health centers in south and central Florida for therapy sessions that were never held.
Some patients also cashed in on the scheme by providing their Medicare numbers, while others were “not coherent enough” to demand kickbacks, according to the investigation by the departments of Justice, and Health and Human Services.
The alleged scam is “unlike anything we’ve seen before in terms of the nature and size of the scheme,” said Assistant Attorney General Lanny Breuer.
Federal authorities arrested four of the company’s owners and top managers Thursday and served search warrants at several of the centers.
Repeated telephone calls to ATC went unanswered Thursday.
The grand jury indictment alleges that ATC routinely billed Medicare for therapy and other services for patients suffering from Alzheimer’s and severe dementia even though they weren’t eligible because their mental capacity was so impaired they couldn’t benefit from therapy.
Employees met regularly for “charting parties” where they falsified medical charts to make it look like patients had a mental illness and needed medication and therapy to be stabilized, Mr. Breuer said. But those patients were already stabilized or didn’t require medications.
Authorities are still investigating whether the company actually withheld medication from patients or just doctored the charts.
The therapy was supposed to be intensive counseling for patients suffering acute mental illness and on the verge of hospitalization, but federal officials said ATC didn’t give any counseling. Instead, patients were bused in and sat in rooms watching TV and playing games, authorities said.
“Elderly and infirmed patients were left in rooms for hours and hours … and were not even cognizant of where they were or what was happening around them,” Mr. Breuer said.
Marianella Valera, one of ATC’s owners, manipulated records so patients would have to stay longer at the facility racking up a higher bill for Medicare, the indictment says.
Officials said the indictment culminates a months-long investigation into the latest Medicare service to be targeted by scammers — mental health care.
They say crooks have moved from medical equipment and HIV infusion scams to home health care services as federal authorities have cracked down on the estimated $60 billion to $90 billion a year problem. Miami has long been the epicenter of Medicare fraud, responsible for roughly $3 billion a year.
Cleaning up Medicare fraud will be key to paying for President Obama’s health care overhaul. Federal officials have allocated more money and manpower to fight fraud, setting up strike forces in several cities. So far, the operations are responsible for more than 810 indictments that collectively billed the Medicare program more than $1.8 billion.
Authorities started investigating the company after an employee contacted them.
Lawrence Duran, another ATC owner, visited Rep. Ileana Ros-Lehtinen in January to discuss health care reform and recorded a YouTube video of the meeting, saying his centers treat more than 450 patients daily.
“We want to try to protect them, make sure the patients we’re providing services for are well treated,” he says in the video.
It was not immediately known whether Miss Valera and Mr. Duran had attorneys.
Suspects trying to take advantage of the” uniquely vulnerable population” served by mental health centers “should expect to pay a heavy price,” said Daniel R. Levinson, inspector general of the Department of Health and Human Services.
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