American Therapeutic Corporation: Why Its Program Director Was Acquitted

American Therapeutic Corporation and American Sleep Institute billed Medicare more than $205 million for unneeded services and care patients did not receive, according to the Justice Department’s account of the criminal trial. But the ATC program director acquittal changed the outcome for the employee who supervised clinicians and reviewed patient charts. In its August 3, 2015 decision in the criminal case, the Eleventh Circuit reversed her conviction and entered an acquittal. The government had failed to prove that she deliberately joined the Medicare fraud conspiracy.

ATC’s Partial Hospitalization Scheme

ATC operated purported partial hospitalization programs at seven locations across South Florida and Orlando. These programs billed Medicare for intensive mental health treatment. The Justice Department’s trial announcement described ineligible patients with late-stage diseases causing permanent cognitive memory loss. The business billed for treatment those patients could not use.

The appellate court described how the operation worked. Patients came through paid referrals, received superficial therapy, stayed as long as possible and were scheduled for readmission after discharge. Files made them appear eligible for partial hospitalization and made the care appear to meet the program’s requirements. Some patients also received unnecessary diagnostic sleep studies through American Sleep Institute.

The appellate opinion describes Medlink Professional Services Group, the management company, funding kickbacks through payments from the treatment businesses. Its promoters delivered cash envelopes to referral sources, including assisted-living facilities and halfway houses. Patient brokers also received money to recruit Medicare beneficiaries. The patient’s attendance fed the business. The chart supplied the clinical explanation.

The Justice Department said the criminal trial evidence showed doctors signing patient files without reading them or treating the patients. The FBI and the Department of Health and Human Services Office of Inspector General investigated the case.

We see an especially ugly inversion in that operation: the files were built to show auditors the treatment that patients should have received. The people arrived. The promised care did not.

The Program Director’s Work Inside ATC

The criminal appeal describes a director whose job put her close to clinical records and Medicare compliance. ATC hired her in September 2005 as a salaried program director. She later became corporate director of utilization review and performance management, then finished her employment as an acting program director.

At the center level, she oversaw clinical and operational work, reviewed records and trained clinicians on documentation. She also supplied the information the billing staff needed. At the corporate level, she supervised program directors and performed mock audits. ATC paid her an annual salary of $66,400, and the court found no evidence that she gained anything from the conspiracy.

The indictment’s specific accusation was that she caused patient files and therapist notes to be altered to make patients appear eligible for partial hospitalization. The court examined the instructions and chart changes behind that accusation.

Why the ATC Conspiracy Conviction Became an Acquittal

The court said the evidence did not show that the program director deliberately joined the scheme. Its account turns on work a healthcare insider would recognize: training clinicians, completing charts, obtaining signatures and dealing with missed treatment.

What Staff Were Told to Put in the Charts

An owner testified that she told the director to train clinicians to describe patients’ symptoms in detail. Prosecutors treated the instruction to “paint the picture” as evidence of falsification. The appellate court said the government had twisted the testimony out of context.

The court noted that the evidence contained no document she allegedly falsified. No clinician testified to telling her that progress notes had been altered. The government’s accusation concerned manufactured eligibility, but the testimony it offered did not establish that she manufactured it.

What Signatures and Attendance Showed

The government also relied on testimony that the director asked a records clerk to “do a couple of charts for me.” The court found that this did not prove she directed the clerk to forge patient signatures. Leaving flagged charts with the owners and collecting them after the flags disappeared likewise failed to establish that she knew the owners had forged doctors’ signatures.

Therapists reported a driver bringing patients late. An owner testified that the director offered to see whether therapists would prepare notes and later said the problem had been handled. The owner billed for the sessions. The court found these few conversations insufficient to support the conviction.

The court’s conclusion was direct: even assuming she knew about the conspiracy, the government had presented no evidence that she deliberately joined and participated in it. That was the basis for the acquittal.

Why the Partial Hospitalization Records Mattered

Partial hospitalization pays for an organized course of intensive treatment. In explaining the Medicare requirements at issue in this criminal case, the court described physician supervision, an individualized written treatment plan and physician certification that the patient would otherwise need inpatient care.

The government’s expert testified that a patient’s symptoms determined suitability for the program and that the patient had to be able to participate in treatment. That explains why an eligibility assessment, a treatment plan and a note describing delivered therapy mattered to ATC’s claims.

The documentation problem also reaches the next clinician trying to provide health care. In a separate whistleblower complaint against Forest View Psychiatric Hospital, the whistleblower alleged that another psychiatrist described covering partial hospitalization patients without even their medication information:

The covering doctor allegedly needed patients’ prescription bottles to work out their care. The clinical account and the billing account have to be examined together.

What Evidence Is Needed to Prove Fraud?

For partial hospitalization billing, we examine how the claims match patient eligibility, attendance and delivered treatment, and who made the decisions behind the chart. The ATC criminal appeal shows why the exact instruction and what a witness personally knew matter.

We examine those connections with the insider who saw the work. A therapist may know which sessions patients attended. A billing employee may know which services reached the claim. A program director may know who requested a chart change, what they asked for and whether that request matched the patient’s care.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What Happened Behind the Chart

If you worked with partial hospitalization charts, patient attendance or Medicare claims, speak to our whistleblower experts about the care behind the billing. We build your strongest behavioral health whistleblower case around what you know, and bring in whistleblower lawyers who know partial hospitalization billing cases. From the first conversation through the case, we stay on your side.