State halts Medicaid payments to psychiatrist Michael Reinstein; federal suit fraud, kickback allegations

November 24, 2012

The Illinois Department of Healthcare and Family Services has suspended Medicaid payments to a controversial Chicago psychiatrist who the federal government says fraudulently prescribed antipsychotic medication to thousands of mentally ill nursing home patients.

The action means that Dr. Michael J. Reinstein, also accused in a federal lawsuit of accepting kickbacks from drug companies, will be prohibited from billing Medicaid, and that any unprocessed bills already submitted will not be paid, said Bradley Hart, Medicaid inspector general.

Hart said the 180-day suspension could be extended pending the status of the federal lawsuit, which was filed last week.

Meanwhile, another state agency, the Illinois Department of Financial and Professional Regulation, has filed a formal complaint against Reinstein that mirrors the federal accusations and could lead to disciplinary action on his medical license. A preliminary hearing is set for Dec. 17.

The two-count complaint alleges that Reinstein "routinely and continuously" prescribed to elderly patients various psychiatric medications, including clozapine, also known by its brand name, Clozaril, despite the risk of potentially life-threatening side effects, including seizures and death.

The "respondent knew and/or should have known that clozapine is considered to be a drug of last resort for elderly patients," the complaint says.

The complaint also alleges that Reinstein prescribed the treatment in exchange for financial compensation from IVAX, the manufacturer of generic clozapine, and Teva Pharmaceutical Industries Ltd., the company that IVAX later merged into.

Reached by phone Monday, Reinstein, 69, said he was unaware of the payment suspension and couldn't comment on it. But he said he prescribed the drug appropriately.

"I feel my treatment with clozapine was justified," he said. "I think for the severely mentally ill population that I treat, the patients I use clozapine with, it was the best choice. I am confident that I will be vindicated."

He said he will borrow money if necessary to continue his medical practice, which includes working at four hospitals, 20 nursing homes and his office in the Uptown area.

Acting U.S. Attorney Gary Shapiro said last week that the federal lawsuit filed against Reinstein represented "the largest civil case alleging prescription medication fraud against an individual ever brought in Chicago."

A joint 2009 investigation by the Tribune and ProPublica, a nonprofit investigative journalism group, revealed Reinstein's unusually heavy reliance on clozapine, which has been linked to at least three deaths. In 2007 he wrote more prescriptions for clozapine than all the doctors in Texas combined, the investigation found. The Illinois Department of Financial and Professional Regulation mentioned the series in its complaint.

In their lawsuit, federal authorities alleged that Reinstein submitted at least 140,000 false claims to Medicare and Medicaid for antipsychotic medications he had prescribed based on the kickbacks he received from pharmaceutical companies instead of the medical needs of his patients.

He also allegedly submitted 50,000 more claims to Medicare and Medicaid in which he falsely stated he had properly monitored the conditions of his patients at more than 30 area nursing homes and long-term care facilities, according to the lawsuit.

The suit seeks triple damages under the False Claims Act as well as hefty civil penalties for each of the tens of thousands of alleged false claims — a total that could easily reach millions of dollars if authorities prove the allegations against Reinstein.

Federal authorities said they are continuing to investigate Reinstein. Hart said his department is assisting them, including calculating the amount of payments for which they may seek restitution.

Source: Deborah L. Shelton, "Watchdog Update: Medicaid payments to psychiatrist halted," Chicago Tribune, November 20, 2012.