HCSN: Recycled Partial Hospitalization Admissions and a Laundering Shell

Health Care Solutions Network Inc. submitted approximately $63.7 million in false partial hospitalization claims to Medicare and Medicaid for unnecessary or unprovided care, according to the Justice Department’s criminal trial announcement. The programs paid approximately $28 million on those claims. Fabricated treatment records brought real public money into HCSN.

HCSN operated community mental health centers in Miami-Dade County, Florida, and Hendersonville, North Carolina. Its owner pleaded guilty to healthcare fraud and money laundering conspiracies on December 17, 2012. The FBI and the Department of Health and Human Services Office of Inspector General investigated his case.

The later criminal trial evidence described unnecessary or unprovided mental health services billed from approximately 2004 through 2011. For someone who worked in admissions, therapy, billing or chart review, the revealing detail is how those jobs fit together: patients kept circulating while their files supplied the treatment story.

How HCSN Turned Ineligible Partial Hospitalization Patients Into Claims

HCSN recruited patients who could not benefit from partial hospitalization, then changed their records to make them appear eligible. The court’s account of the criminal case describes the service HCSN was supposed to provide: intensive psychiatric therapy between inpatient hospital care and routine outpatient treatment.

The court explained that a qualifying patient entered under a physician’s supervision with an individualized written treatment plan. Treatment involved intensive individual and group therapy. Intake records captured the patient’s history, symptoms and medications, while later notes documented the treatment and participation in particular sessions. Those records supported both continued care and decisions to discharge or readmit the patient.

At HCSN, employees edited intake profiles to conceal disqualifying information, including Alzheimer’s disease or dementia. They fabricated treatment plans and therapy notes. The clinical record became a way to get an unsuitable patient through the payment requirements.

The Justice Department’s account of the owner’s criminal case also describes billing for patients watching movies or attending barbecues. More commonly, it describes claims for patients who were not even present at the Miami and North Carolina facilities. We see the priority: the patient could be missing, but the paperwork still had to look convincing.

Bought Referrals and Recycled Admissions

HCSN paid cash kickbacks to hospital employees and assisted-living facility owners for patient referrals, according to the criminal court’s account. The owner directed a business that recruited, retained and readmitted people to maximize billing without regard to their health needs.

The Justice Department described patient recruiters obtaining referrals from assisted-living facilities whose residents often had conditions that made them unable to benefit from the program. The intake staff then had to turn those referrals into apparently qualifying admissions.

In its account of the criminal case, the court explained that stays beyond three months indicated treatment was ineffective and no longer appropriate, although Medicare set no fixed length of stay. HCSN kept patients for generally at least four months, discharging them and immediately admitting them at another HCSN location. A discharge became the start of another admission within the same network.

The same patient. Another location. Another treatment file.

The admission and discharge decisions were supposed to follow medical need. HCSN used them to keep the billing going.

HCSN Therapists, Ghost Lists and Rewritten Notes

HCSN’s therapists helped manufacture the daily account of treatment, according to testimony described in the criminal opinion. They wrote therapy notes for absent patients, copied notes verbatim between different patients’ files and misrepresented what happened during sessions. The court described ghost lists of nonexistent patients used to organize billing for services that never took place.

The changes also reached backward. The employee responsible for preparing files and billing for Medicare review testified that she asked therapists to revise earlier notes. The court described what those revisions involved:

According to that testimony, the therapists took the notes home, made the requested changes and signed them. At trial, the office manager connected patient therapy notes to dates when the patients were absent and identified the therapists’ signatures on those notes.

Physician approval supplied another part of the paperwork. The Justice Department’s account of the trial evidence says HCSN’s medical director routinely signed records he knew were fabricated or altered without reviewing their substance and, in most instances, without meeting the patients. The criminal opinion also describes his authorization to use his signature stamp without review so fraudulent documents could be signed faster.

The three therapists were convicted of joining the healthcare fraud conspiracy. An earlier jury had acquitted them of false-statement charges concerning six particular patient notes.

For us, the telling detail is the invented progress. A file could describe improvement because staff had changed the symptoms and inserted something the patient never said. The people preparing those records knew how to make a chart look like treatment was working.

Psychiatric Consulting Network and the Money After Payment

Psychiatric Consulting Network Inc. served as a shell corporation through which HCSN laundered millions in health care fraud proceeds. The Justice Department described it as a Florida corporation and reported that HCSN’s owner admitted his role in that money laundering scheme.

The clinical files supported payment to the treatment business, and a separate corporate vehicle helped launder the proceeds. An insider who knows the accounting side may see a part of the operation that a therapist never sees.

The Same Pressure Points in Other Partial Hospitalization Cases

American Therapeutic Corporation used a similar combination of bought referrals and altered clinical information. In the criminal case involving its owners’ guilty pleas, the admitted conduct included paying assisted-living operators, halfway houses and brokers to supply beneficiaries, then changing diagnoses, medication information and therapist notes to make patients appear eligible for Medicare partial hospitalization.

At Biscayne Milieu, the Justice Department’s announcement described criminal trial evidence of ineligible patients, services never provided or not reimbursable, falsified records and sham case-manager contracts used in a scheme involving recruiter payments.

These cases put referral money and clinical paperwork in the same picture. Paying someone to supply patients gave the provider a stream of admissions. Altering the records made those admissions look suitable for the treatment being billed. HCSN added its own documented pattern of moving discharged patients between locations and rewriting the account of their progress.

What Evidence Is Needed to Prove Fraud?

Records and testimony that connect a claim to what actually happened can expose the fraud. In the HCSN criminal case, that evidence connected false claims to absent patients, fabricated treatment notes, paid referrals and the people directing those practices. The office manager’s comparison of signed notes with dates of absence made the difference between the claimed session and the patient’s actual attendance concrete.

A therapist may recognize language inserted after the session. An admissions employee may recognize the same patient returning through another center. Someone in billing or accounting may know how the treatment claim or referral payment was handled. We bring those views together around the specific conduct each person knows.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our work with a potential whistleblower starts with the connection between what the provider billed and what the people inside know happened.

You Know What Happened Behind the Chart

If you saw patients recycled between centers or notes rewritten to support care that never happened, speak to one of our Whistleblower Experts about what you saw. We work beside you to build your strongest partial hospitalization whistleblower case and bring in healthcare fraud whistleblower lawyers who understand partial hospitalization billing and bought referrals. From the first conversation through the case, you have experts on your side who can connect the clinical decisions to the money.