US largest operator of mental health facilities pays $3.45 million to settle fraud charges

May 2, 2012

           United States Attorney Benjamin B. Wagner announced that Psychiatric Solutions Inc. (PSI) and Universal Health Services Inc. (UHS) have agreed to jointly pay $3.45 million to the United States to settle allegations that subsidiary BHC Sierra Vista Hospital Inc. defrauded the Medicare program. PSI owned Sierra Vista when the alleged conduct occurred; UHS acquired PSI and subsidiary Sierra Vista in November of 2010 and is jointly responsible according to the purchase arrangement.

            Sierra Vista owns and operates a psychiatric facility at 8001 Bruceville Road in Sacramento. The facility provides both inpatient and outpatient psychiatric services to Medicare beneficiaries and others. The United States contends that Sierra Vista failed to provide the number of services to certain patients required to qualify for per-diem payment under Medicare’s Partial Hospitalization Program. Sierra Vista then fraudulently billed for these unqualified patient visits from January 2003 through September 2009.
            The Partial Hospitalization Program is an intensive outpatient program of psychiatric services provided to patients as an alternative to inpatient psychiatric care. It is intended for patients who have an acute mental illness. Regulations require outpatient hospitals to provide at least three defined services each day for payment under this program. This requirement is meant to assure consistency in the level of program intensity among providers.

            Other alleged conduct resolved by this settlement agreement includes billing for outpatient treatment where beneficiaries attended only sporadically. There was also a failure to meet conditions required for payment, including: obtaining approval of certain outpatient treatment, documenting individual outpatient therapy sessions, obtaining physician orders for certain lab work and obtaining physician certification for certain admissions.

            As part of this resolution, Sierra Vista has entered into a five-year Corporate Integrity Agreement with the Office of the Inspector General for the Department of Health and Human Services (HHS OIG). The Corporate Integrity Agreement requires Sierra Vista to establish and maintain a designated Compliance Program that includes oversight by a Compliance Officer and Committee, designated training and education, and annual reporting to HHS OIG.

            This settlement also resolves allegations contained in a whistleblower lawsuit filed by a former Sierra Vista Utilization Review Coordinator under the qui tam provisions of the False Claims Act. The whistleblower provisions of the False Claims Act permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery. As part of today’s resolution, the whistleblower will receive a percentage share of the recovery in the amount of $587,000.

            “Today’s settlement demonstrates our continuing commitment to protect the integrity of the Medicare program, both by assuring appropriate care to beneficiaries and by recovering improperly paid funds,” said U.S. Attorney Wagner.

            This settlement is the result of an investigation by the U.S. Attorney’s Office for the Eastern District of California and the U.S. Department of Health and Human Services, Office of Inspector General. Assistant United States Attorney Catherine Swann handled the matter for the United States.