Largest Civil Fraud Settlement Obtained by Attorney General's Medicaid Fraud Unit

Behavioral Healthcare Provider to Pay $2.7 Million for Billing When Patients Were Absent

June 7, 1999

Attorney General J. Joseph Curran, Jr. today announced that a psychiatric hospital and residential treatment center has agreed to pay $2.7 million to the state's Medical Assistance (Medicaid) program to settle allegations that it billed the Medicaid program for days on which patients were temporarily absent from the facility.

Charter Behavioral Health Systems at Potomac Ridge, located at 14901 Broschart Road, in Potomac, Maryland, has agreed to refund overpayments of $1,941,127 and to pay additional damages of $829,724 because of allegations that it defrauded the state's Medicaid program. This is the largest civil fraud settlement in the eighteen-year history of the Attorney General's Medicaid Fraud Control Unit.

Charter's Broschart Road facility, which includes both an acute care psychiatric hospital (Potomac Ridge) and a long-term residential treatment center (Fairbridge) for troubled adolescents, was the subject of a year long investigation by the Attorney General's Medicaid Fraud Control Unit. That investigation revealed that even though patients residing at Fairbridge were often allowed to go home on "leave" during weekends and holidays in order to be with their families, Charter regularly billed Medicaid for the days on which the patients were absent. By law, Medicaid will not pay for residential psychiatric treatment unless the patients are actually there to receive it.

The evidence showed that billing for leave days had been a practice when the facility was owned by National Medical Enterprises. When National Medical Enterprises was prosecuted for fraud in 1994 and sold the facility to Charter, the practice of billing for leave days continued until June, 1997, when the facility was audited by the Department of Health and Mental Hygiene's Long Term Care Division. Following that audit, the matter was referred to the Attorney General.

"This should send out a strong message to providers that they must follow the rules or else pay the price," said Attorney General Curran. "There is simply no place for providers who insist on cutting corners in dealing with the Medicaid program."

The settlement agreement provides for the repayment of all leave days billed to Medicaid from the day on which Charter acquired the facility until the practice was halted following the Department's audit. Charter is the nation's largest provider of behavioral healthcare services, operating 91 facilities across the country with headquarters in Atlanta, Georgia.

For Further Information Contact:
Frank Mann
Special Assistant to the Attorney General
(410) 576-6357