Program Director and Therapist Convicted In $205M Mental Healthcare Fraud

by Akerman LLP

[author:  Ari Gerstin]

Just over two years after the raid on the Miami headquarters of mental healthcare chain American Therapeutic Corporation (American Therapeutic), a former program director and therapist in the Ft. Lauderdale office of the company were convicted of conspiring to defraud the Medicare program in a $205 million scheme. 

American Therapeutic operated partial hospitalization programs in seven different locations throughout South Florida and Orlando, providing intensive treatment for severe mental illness. According to federal officials, however, the company was little more than an elaborate scheme to bill Medicare for hundreds of millions dollars in false and fictitious services, for thousands of patients who were not actually not qualified for treatment under the government sponsored program.

Inadequate Documentation of Face-to-Face Encounters
Although documentation submitted by the company for reimbursement made it appear that the patients being treated were qualified for care under the Medicare program and that the treatments being provided were legitimate, investigation revealed that doctors at American Therapeutic were "robo-signing" patient files without seeing or treating the patients. Additionally, claims were submitted for care rendered to patients who were in neuro-vegative states, late stages of diseases causing permanent cognitive memory loss or were suffering from substance abuse addition without a severe mental illness, all of whom were ineligible under the Medicare program for the treatment allegedly provided. 

Provider Vacation and Travel Records Under the Microscope
In some instances, claim documentation showed that Medicare was billed for services allegedly rendered while the treating physician was out of the country on vacation. Due to the increased linkage of various databases maintained by government agencies and cooperation among agencies, the investigation of "robo-signing" (or absent provider) cases has become much more streamlined over the past several years. When investigating allegations of healthcare fraud, government investigators now routinely cross-check records of providers' air travel and border crossings, and even electronic state highway toll payments (such as SunPass or E-Pass) to determine whether the provider could have been present and rendered treatment as billed, or if the provider was out of town at the time. 

Ignorance of Fraud No Defense
The recent convictions came out of a retrial recently conducted in federal court in Miami.  The defendants previously escaped convictions when their initial jury deadlocked and was unable to reach a unanimous verdict. Now, after being convicted, the former senior employees are in federal custody and facing up to 10 years in prison at sentencing. At trial, their lawyers unsuccessfully argued that the women were unaware of the fraud being perpetrated around them at American Therapeutic and that they provided legitimate therapy services to patients.

The pursuit of American Therapeutic and its employees, even after the initial setback of receiving a hung jury verdict, demonstrates the government's commitment to aggressively investigate alleged healthcare fraud against government programs.  Approximately 35 defendants associated with American Therapeutic's seven-clinic mental healthcare chain have been charged and convicted of defrauding the Medicare program since it was shut down two years ago. Those include former company owner Lawrence Duran, who is now serving the stiffest Medicare fraud punishment on record, 50 years in prison. Also convicted in the scheme were several psychiatrists who were charged by the government with altered diagnoses and medications for thousands of patients to make it appears as if they qualified for services covered by Medicare.

New Focus on Cut-and-Paste Medical and Treatment Records
While technology has in some ways streamlined the billing process, it has also fostered the growth of "cut-and-paste" medical records and treatment notes. More and more, providers are receiving medical records from their colleagues that contains several pages of generic text and only a mere paragraph or two concerning the specific patient about which the record concerns, raising questions about the accuracy and reliability of such records. The government has already identified these practices as a target for future enforcement and is looking to make examples out of providers who fill records with generic background information to mask the dearth of personalized treatment information actually contained in the record.  See September 24, 2012 letter from HHS Secretary Kathleen Sebelius and Attorney General Eric H. Holder, Jr. to the chief executives of America's largest hospital associations, which notes "troubling indications" of abuse in the use of electronic health records and warns that the government will vigorously prosecute providers who attempt to "game the system" by "cloning" medical records, or "upcoding" either the intensity of care rendered or the severity of a patient's condition.

In these times of heightened enforcement, what may have previously been considered simple isolated calendaring or paperwork errors may suggest to the government that there is wide-spread billing for services rendered while providers are not in the office or other pervasive fraud.  This can lead to the commencement of an invasive audit or even a full-scale fraud investigation.  More than ever, it is now essential that providers have the appropriate procedures in place to catch billing errors and paperwork deficiencies before claims are submitted.  These procedures should be supplemented with regular audits of practices at all locations in a system to ensure that best practices are always being followed and that any issues are addressed in a timely fashion to avoid unwanted surprises later.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Akerman LLP | Attorney Advertising

Written by:

Akerman LLP

Akerman LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.