IMPORTANT FACTS

1. Despite more than a decade of healthcare fraud investigations and convictions in the United States alone, psychiatrists and psychologists have not reformed the fraudulent practices that are rife within their ranks. In 2004, a Defense Criminal Investigative Service reported yet another increase in fraud in psychiatric and psychological services.

2. Fraudulently hospitalized citizens have been held until their mental health insurance benefits ran out. The psychiatric �diagnosis� was often changed to exhaust the insurance coverage.

3. The fraud is international in scope. Australia, for example, has reported widespread mental health fraud, including therapists billing insurance companies for having sex with patients.

CHAPTER ONE Mental Health: Big Business

On April 12, 1991, in Dallas, Texas, two uniformed security guards in a patrol car pulled up beside 14-year-old Jeramy Harrell and took him, against his will and his mother�s protests, to a private psychiatric hospital owned by Psychiatric Institutes of America (PIA), a subsidiary of National Medical Enterprises (NME). A psychiatrist, Mark Bowlan, and a child welfare agent �who had never spoken with Jeramy or his parents�had filed an application to the court for the boy�s detention, claiming he was a �substance abuser� and that his grandparents had physically abused him. Bowlan also claimed that Jeramy was �truant from school, failing grades, and violent [and] aggressive.� If not treated, he added, the boy would �continue to suffer severe and abnormal mental, emotional or physical distress,� and deteriorate.

It took Texas State Senator Frank Tejeda�s intervention to obtain Jeramy�s release after he had discovered the boy�s admission was based on the unsubstantiated and untrue comments made by Jeramy�s 12-year-old brother, Jason.

During the six days Jeramy was held in the facility, he was drugged without his parents� authorization and they were also refused permission to visit him. He was turned from a vivacious boy into someone with a glassy stare and dragging gait. The family�s health insurance was billed $11,000 (8,975) for this fraudulent �admission� and �treatment.�

The case sparked statewide and national investigations on an unprecedented scale into mental health care fraud and abuse.

On April 28, 1992, Congresswoman Pat Schroeder, chairwoman of the House of Representatives Select Committee on Children, Youth and Families, delivered a scathing rebuke of the �unethical and disturbing practices� discovered. She reported that �thousands of adolescents, children, and adults have been hospitalized for psychiatric treatment they didn�t need � that patients are kept against their will until their health insurance benefits run out � [and] that bonuses are paid to hospital employees, including psychiatrists, for keeping the hospital beds filled.� It was �big business,� she said.

Texas State Senator Mike Moncrief testified: ��[W]e have uncovered some of the most elaborate, creative, deceptive, immoral, and illegal schemes being used to fill empty hospital beds. ... This is not just unreasonable. It is outrageous. And it is fraudulent.�

Criminal charges against psychiatrists and hospital directors ensued, continuing up to the present. One conviction resulted in psychiatrist Robert Hadley Gross beginning a one-year jail sentence in April 2004 for billing patient services he never delivered, and for accepting $860,000 inpatient referral �kickbacks� in the early 1990s.

The scandal caused a domino effect in the United States with numerous other private for-profit psychiatric hospitals paying tens of millions in refunds, penalties and settlements. In 2000, the U.S. Justice Department investigated the private psychiatric hospital chain Charter Behavioral Systems, Inc. for fraud and abuse. That year, the company agreed to pay the government $7 million to settle allegations regarding overcharging Medicare insurance and other federal programs.

In Switzerland, in 1998, police raided three private psychiatric hospitals in the canton of Ticino, arresting and charging Renzo Realini, a renowned psychiatrist and owner of the facilities, with fraud and falsifying documents. Records showed that Realini had been billing for 30-hour days.

Australia has also reported widespread mental health fraud, including psychotherapists and psychiatrists billing the government�s Medicare insurance for having sex with patients. One psychiatrist charged Medicare $98 for rolling around on a rug with his patient in his backyard before having sex with her in his bedroom.

In Russia today, psychiatrists commit unscrupulous fraud by manipulating vulnerable and wealthy patients into signing over control of their homes and property.

In 2004, the U.S. Defense Criminal Investigative Service (DCIS) issued a report stating: �The DCIS has found an increase in fraud in the delivery of mental health services, including those provided by hospitals, clinics and private practitioners. A review of recently completed and ongoing investigations suggests that psychiatric and psychological services are vulnerable to abuse, particularly in the following areas: billing for �phantom� psychotherapy sessions;
billing for excessively long hospital stays for inpatient psychiatric care; providing kickbacks to physicians; and grossly inflating the number of psychotherapy hours provided to obtain thousands of dollars in overpayments from government and private insurance programs.�

Other reported fraud schemes have included billing insurance companies for patient therapy when the client was in jail, charging for mental health therapy for a nursing home patient who was in a coma, and providing daily �group therapy� sessions that, in actuality, consisted of giving away free cups of coffee, socializing and listening to music.

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