FOR IMMEDIATE RELEASE CIV WEDNESDAY, AUGUST 19, 1998 (202) 616-2765 (202) 514-1888

PSYCHIATRIC HOSPITAL CHAIN SETTLES ALLEGATIONS OF MEDICARE FRAUD
WASHINGTON, D.C.- The Department of Justice announced today that a psychiatric hospital chain has agreed to pay $4.7 million to settle allegations that it fraudulently admitted and extended the length of psychiatric stays of hundreds of elderly Medicare beneficiaries from the Orlando, Fla., area in order to collect millions of dollars in improper Medicare reimbursements. Charter Behavioral Health Systems, Inc., and Charter Hospital of St. Louis, Inc. d/b/a/ Charter Hospital Orlando-South reached a settlement after allegations were filed under the False Claims Act in U.S. District Court in Orlando. The government's second amended complaint alleged that a large proportion of the hospital's Medicare beneficiaries were residents in Orlando area nursing homes or assisted living facilities and suffered from debilitating organic brain disorders, such as Alzheimer's Disease and severe dementia. These beneficiaries, who often were utterly incapacitated by their disorientation, were routinely admitted to Charter Hospital for "psychiatric treatment" by doctors allegedly seeking to increase patient admissions in response to pressure from Charter's corporate headquarters regarding overall financial performance. "The elderly are among our most vulnerable citizens," said Frank W. Hunger, Assistant Attorney General of the Civil Division. "We will continue to be vigilant in ensuring that hospitals and doctors receiving federal funds provide care that is driven by the patients' needs rather than the desire for profit." The original lawsuit was filed by relators or "whistle blowers," and the government intervened in the lawsuit in August 1996. Under provisions of the False Claims Act, relators can recover 15 to 25 percent of the damages paid to the United States if the government intervenes in the action. In this case, relators Francine Mettevelis and Rhea Rowan will share $903,899 of the recovery.

Hunger said that the settlement was reached following an investigation by the Department of Defense's Defense Criminal Investigative Service office in Orlando in conjunction with the Civil Division of the Department of Justice into allegations that the defendants had been defrauding federal healthcare programs for several years. In addition to the $4.75 million payment, the hospital, now known as Charter Behavioral Health System Orlando, L.P., will be monitored by the government under a five-year corporate integrity agreement and will not bill the Medicare program for any services for 15 months, beginning on August 1, 1998. The case was handled by T. Reed Stephens, Elizabeth I. Hack, and Robert MacAuliffe of the Fraud Section, Civil Division of the Department of Justice. The Office of the Inspector General of the Department of Health and Human Services was represented by Senior Counsels William J. Heffron and Andrew Penn.

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