American Therapeutic Corporation: Buying Patients, Then Making the Records Fit

The American Therapeutic Corporation fraud case exposed more than $205 million in fraudulent Medicare billing through bought referrals and false treatment records, according to the Justice Department’s account of the owners’ guilty pleas. Patients arrived through assisted-living facilities, halfway houses and brokers who received kickbacks. Employees changed the clinical files to make those patients appear eligible for intensive psychiatric treatment. If you worked in admissions, medical records or billing, the machinery behind this case may be more familiar than the headline figure.

American Therapeutic Corporation operated purported partial hospitalization programs at seven locations across South Florida and Orlando. American Sleep Institute supplied another billing channel, while Medlink Professional Management Group handled the money behind the referrals. In the May 3, 2011 corporate guilty pleas, ATC and Medlink admitted participating in a Medicare fraud scheme that began in 2002 and continued until October 2010. The FBI and the Department of Health and Human Services Office of Inspector General investigated the case.

What the Partial Hospitalization Claim Promised

Partial hospitalization is intensive psychiatric treatment delivered without an inpatient stay. In its opinion in the ATC criminal case, the Eleventh Circuit explained the Medicare requirements behind the claims: physician supervision, an individualized treatment plan and care reasonably expected to improve or maintain the patient’s condition and prevent relapse or hospitalization.

The physician also had to certify that the patient would otherwise need inpatient care. That made the treatment plan, the admission assessment and the physician’s continuing review central to what Medicare was buying. The court’s account included a patient who was completely catatonic and unable to participate in therapy, yet whose signed chart said he had been admitted and treated as eligible.

The court described ATC’s operation in a different sequence. Recruit ineligible patients, keep them as long as possible, occupy them with superficial therapy, discharge them and schedule their return when Medicare rules allowed it. Files prepared for possible audits portrayed the patients as eligible and the treatment as delivered. An architect of the scheme testified that very few patients qualified on admission and fewer still received appropriate services.

We find the business model absurd: buy the patient, then invent the medical reason to keep them. Medicare paid for intensive treatment. The file supplied the appearance of it.

The Owner Built a Paid Patient Network

The owner who also served as Medlink’s president developed the referral network, according to the court. Assisted-living facilities and halfway houses supplied patients, while brokers approached Medicare beneficiaries directly and paid them to attend ATC. The corporate-plea announcement describes owners recruiting those referral sources and paying millions of dollars in kickbacks. Some patients received a portion of the payments.

One broker in the court’s account ran substance-abuse centers that required clients to have Medicare and attend ATC. Without Medicare, a client could stay only a few days. Housing access and attendance at the billed program were tied together. The person who controlled the residential placement also controlled a stream of patients the clinic could bill for.

The same owner and ATC’s president admitted using American Sleep Institute to submit fraudulent claims. The charges the companies pleaded to described ATC patients referred for sleep studies even though they did not qualify. The same referral relationship could therefore feed both the psychiatric program and the sleep-study business.

For an insider, that connection puts the referral source, the clinic and the housing operator in the same picture. The clinical chart shows the stated reason for treatment. The referral arrangement can show why that patient actually arrived.

The Clinical Owner Decided How Long Patients Stayed

ATC’s president predetermined patients’ stays around their remaining Medicare benefits, according to the court. The court described the sole criterion for keeping a patient as whether that patient was at or near the maximum benefit. A psychiatrist signed recertifications saying patients still needed partial hospitalization even though the owner had made the decision.

The court also described the president altering a physician assistant’s notes to make patients appear eligible. The psychiatrist supervising that assistant knew the notes were being changed. Separately, the corporate-plea announcement described instructions to employees and doctors to alter diagnoses and medication types and levels.

Those changes reached the clinical reasons Medicare would pay. A recertification presented a medical judgment about continued treatment, while the business had already selected the length of stay. The signature came afterward.

Medlink Turned Medicare Payments Into Referral Cash

Medlink’s only clients were ATC and American Sleep Institute, according to the corporate-plea announcement. It presented itself as a health care management company. The court describes its actual role as the center of the kickback operation: the treatment businesses paid Medlink $20,000 per month per facility, and Medlink used that money to fund referral payments.

The superseding indictment charged that participants registered phony corporations, opened bank accounts and moved checks and wire transfers through them. They converted the payments to cash, returned it to the owners and distributed portions to assisted-living and halfway-house operators.

The indictment described Form 1450 for community mental health center claims and Form 1500 for sleep-clinic claims. The court identified First Coast Service Options as the Medicare contractor that processed and paid ATC’s and American Sleep Institute’s claims. Different claim forms fed the same cash operation.

The court’s later account explains why that cash mattered to the business. Medlink paid referral sources hundreds of thousands of dollars monthly at the height of the fraud. Medicare revenue financed the next round of patient acquisition.

The amounts billed and the money received tell different parts of that story. The appellate opinion put ATC’s Medicare billings at $199.4 million and its receipts at $85.7 million. American Sleep Institute separately billed $5.8 million and received $1.8 million.

The Administrator Matched Cash Envelopes to Billing Logs

The administrator running Medlink’s kickback operation negotiated referral rates and calculated what each source was owed from monthly Medicare billing summaries and master patient logs. The court describes her obtaining cash from the owner and the shell companies, filling envelopes and arranging delivery.

She also handled complaints from referral sources who believed they had been underpaid. The people delivering patients expected the cash to match the business they had supplied. In her hands, the billing summary and the patient log turned attendance into an amount owed to a broker.

Physician Signatures Kept the Claims Moving

The court’s account of the criminal case described two psychiatrists working only two to three hours a week per facility. Staff turned pages as they signed charts for clinical work they had not performed, including treatment plans and certifications of continuing need. The physician’s name helped make a business decision look like a medical one.

The Psychiatrist Who Kept Referred Patients Coming Back

One ATC psychiatrist helped a broker return patients from local hospitals to the broker’s facilities and supplied discharge papers that would facilitate their return to ATC, according to the court. He also wrote blank sleep-study prescriptions knowing the broker would use them to get paid for sending patients to American Sleep Institute.

Inside ATC, the same psychiatrist signed treatment plans certifying that he had prepared them, although he had not. He signed continuing-care certifications without deciding how long patients should remain or when they should leave. The court attributed $70.4 million in ATC Medicare billings to him from October 2007 through September 2010, nearly equaling the billings attributed to the company’s other thirty-nine physicians. It put his pay at $641,000.

His role connected the referral business to the clinical paperwork. He helped preserve the patient stream outside the clinic and supplied signatures inside it.

The Psychiatrist Whose Charts Placed Him in the Country

Another psychiatrist signed and dated charts representing that he had admitted and attended to patients while he was abroad, according to the court. He left ATC after a program director challenged those records and threatened legal action.

The court described this psychiatrist knowing that the clinical owner altered his assistant’s notes. It also described him receiving referral cash. The administrator discovered his referral arrangement when facilities were missing from the patient log she used to calculate kickbacks.

The court attributed $38.5 million in ATC Medicare billings to this psychiatrist from May 2004 through September 2008, and put his pay at $586,340.

The same court reversed a different program director’s conviction and ordered an acquittal because the evidence did not establish that she willfully joined the conspiracy.

Health Care Solutions Network and the Physician’s Signature

Health Care Solutions Network was a separate partial hospitalization operation with its own criminal case against a medical director and therapists. The court’s account of that case described fabricated partial hospitalization records and physician signatures supporting treatment that was unnecessary or never provided. It also described cash kickbacks for referrals from hospital employees and assisted-living owners.

That case adds the patient’s side of the false record. The court described inappropriate and inadequate treatment and put the consequence plainly:

The recurring mechanism connects paid referrals, invented treatment records and the physician’s certification. The patients themselves were supposed to receive the care those records described.

Blank Certifications in a Separate Whistleblower Complaint

A whistleblower’s complaint against Havenwyck Holdings alleged another way to manufacture the appearance of physician review. It alleged that staff backfilled certification dates after discharge and that physicians signed blank forms during the patient’s stay:

These are the whistleblower’s allegations in a separate case. They put a recognizable question beside ATC’s signing practices: when did the clinician make the decision that the completed form says was made? A signed form can tell one story while the people who watched it being completed know another.

What Evidence Is Needed to Prove Fraud?

Our whistleblower experts assess how the clinical records, billing and referral arrangements fit together in a partial hospitalization healthcare fraud case. ATC’s criminal case supplies concrete examples: original and altered clinical notes, certifications, physician presence, patient logs, Medicare billing summaries and the referral payments calculated from them.

We work with insiders to connect those pieces. An admissions employee may understand the referral arrangement, a clinician may know why a note changed, and a billing employee may recognize the claims the change supported. The useful account explains how those actions met inside the same operation, including who gave the instructions and who knew what the documents represented.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our whistleblower experts assess how the treatment and payment practices you know could support a civil case.

You Know How the Chart Got That Way

If you saw clinical notes changed to fit a claim, patients bought through referral payments or signatures supplied for care that never happened, speak with our whistleblower experts. We build your case around the decisions you can explain and bring in Medicare fraud whistleblower lawyers who understand psychiatric treatment and referral schemes. We stay beside you throughout the case, with the treatment and billing expertise to make your knowledge count.