Continuum / Westbury: Buying Referrals for Patients Who Did Not Qualify

The Continuum / Westbury fraud case concerned approximately $189 million billed to Medicare for partial hospitalization services supported by purchased referrals, according to the Justice Department’s account of the criminal case. Four executives pleaded guilty to their roles. A program for intensive psychiatric treatment paid people to bring in patients who largely did not qualify for it.

In its April 23, 2021 announcement, the U.S. Attorney’s Office for the Southern District of Texas described Continuum Healthcare’s ownership of Westbury Community Hospital in Houston and community mental health centers known as Hornwood, Baytown and Missouri City. Each location operated a partial hospitalization program. The four executives handled day-to-day operations and helped implement the kickback programs.

Partial Hospitalization Was Supposed to Provide Intensive Treatment

Partial hospitalization provides structured psychiatric treatment without an overnight hospital stay. In its account of the Continuum criminal case, the government described a program intended to closely resemble short-term inpatient treatment while providing less than round-the-clock care.

The facility arrangement helps explain the billing story. According to the same announcement, Continuum opened Westbury Community Hospital in 2010. Hornwood and Baytown became outpatient centers operating their existing partial hospitalization programs under the Westbury name, and Westbury opened a program too. Patients could enter the system at different locations while those locations operated under the hospital’s name.

Medicare’s September 2026 requirements call for a patient who can participate without round-the-clock care but would otherwise need inpatient psychiatric treatment. The physician’s certification and individualized treatment plan connect the patient’s condition to that intensity of care.

The payment follows a program day. CMS’s hospital outpatient billing manual ties that day to qualifying services and reported service dates, units and charges. For a biller or clinician, the useful connection runs from the person’s need for intensive treatment to the care recorded for the day and the payment requested for it.

How Does Patient Brokering Work?

Patient brokering turns access to patients into something a treatment business buys. In the Continuum case, personal-care-home owners and company marketers admitted receiving money to refer patients, according to the Justice Department’s October 30, 2019 account of the guilty pleas.

The personal-care-home owners supplied access to residents. Continuum’s marketers supplied referrals to the treatment operation. The executives ran the centers and implemented the payment programs. Those roles explain how a referral could become revenue: someone delivered the patient, the center treated the patient as eligible for partial hospitalization, and Continuum submitted the claim.

The same criminal-case account says the vast majority of referred patients did not qualify for partial hospitalization. It described people who were not experiencing an acute psychotic episode and others with conditions including dementia or Alzheimer’s.

We see the central absurdity in that arrangement: a program built around a patient’s need for intensive treatment paid other people to supply patients who largely did not qualify for it. The referral payment had a business purpose even when the treatment had no corresponding justification.

Bought access. A claim attached.

Referral Payments and False Claims

The Justice Department reported approximately $66 million paid on the centers’ claims.

In the guilty plea described in the October announcement, one Continuum executive admitted participating in a kickback scheme that paid other defendants to bring patients to the company. He also admitted causing Medicare to pay $18.8 million based on false and fraudulent claims. Across the scheme, the government reported that the home owners and marketers each received $130,000 to $2.6 million for referring patients.

That admission connects a decision inside the business to money the government paid. The referral arrangement, the false claim and the resulting payment appear together in the executive’s own plea. For someone who knows the admissions or billing operation, that connection is more revealing than a large total on its own.

Here, the government’s account put purchased patient access at the front of a system billing for unnecessary intensive psychiatric treatment. Taxpayers paid for the claims while the referral payments rewarded the people supplying patients.

Management Controlled the Referral Payments

The executives who ran the centers also helped implement the kickback programs, according to the government’s criminal-case account. Management’s decisions reached both who came through the doors and how referrals were paid for. That gives an insider a concrete reason to look beyond the name of the clinician on a treatment record when explaining how the operation worked.

The FBI, the Department of Health and Human Services Office of Inspector General, the Texas Attorney General’s Medicaid Fraud Control Unit and IRS Criminal Investigation participated in the joint investigation.

A person working in admissions may know who supplied patients. Someone handling payments may know what the home owner or marketer was paid for. A clinician may know whether the patient could participate in the program. Each view can explain a different decision behind the same claim.

What Evidence Is Needed to Prove Fraud?

In a purchased-referral case, we work with you to connect the referral payments, the patient’s eligibility, the treatment records and the claims. Continuum’s criminal-case announcements supply that chain through the executives’ roles and the admissions about referral payments. Other cases show why the clinical paperwork deserves equal attention.

In the criminal health care fraud case involving Spectrum Care, the Justice Department described patients who did not qualify for partial hospitalization spending time watching movies, coloring or playing games while physicians signed admission and progress records. Owners paid group-home operators and recruiters.

The parallel is the connection between bought referrals and records supporting intensive-treatment claims. The activities described in the Spectrum case make the gap visible: what the program recorded and what patients actually did could tell very different stories.

A separate amended whistleblower complaint against Havenwyck Holdings alleged that staff filled in certification dates after patients left. Its description puts the paperwork problem plainly:

The timing matters: a form completed later can make the chart tell a different story about when a clinical decision was made. The employee who understands how that form was created may see something the finished chart conceals.

Our work with an insider brings those views together: who controlled the referrals, what the payments bought, what care the patient needed and what the government was asked to fund. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know How Patients Reached the Program

If you know who bought the referrals or how ineligible patients became partial hospitalization claims, speak with our whistleblower experts about what you saw inside the operation. We work alongside you to build your strongest case around those decisions and bring in healthcare fraud whistleblower lawyers who understand psychiatric treatment and referral kickbacks. You bring the inside knowledge, and we stay with you through the case.