Medlink: The Management Company That Moved American Therapeutic’s Referral Money

The Medlink Professional Management Group fraud case exposed how American Therapeutic Corporation’s management company helped finance patient kickbacks in a scheme that billed Medicare more than $205 million for medically unnecessary services. The criminal court record follows the money from treatment providers through management fees and sham companies into envelopes of cash. For someone who handles billing, referral accounts or payments between companies, the revealing part is how the patient logs explained the cash payments.

Medlink and American Therapeutic Corporation pleaded guilty on May 3, 2011. Medlink’s plea was to conspiracy to commit health care fraud. In entering the corporate pleas, the companies’ presidents admitted that the businesses participated in the Medicare fraud scheme from 2002 until October 2010.

The Treatment Business and Its Management Company

American Therapeutic Corporation operated purported partial hospitalization programs at seven locations across South Florida and Orlando. American Sleep Institute supplied a separate route for sleep-study claims. According to the Justice Department’s account of the corporate pleas, those businesses were Medlink’s only clients. Medlink was headquartered in Miami and presented itself as a management company for healthcare businesses.

A partial hospitalization program provides intensive treatment for severe mental illness. The Eleventh Circuit’s account of the criminal case explains the Medicare requirements at the time: physician supervision, an individualized treatment plan and a patient who would otherwise need inpatient care. The government’s clinical expert testified that the patient’s condition also had to allow participation in treatment.

The court described a business that paid to bring in Medicare beneficiaries who were ineligible for that care, occupied them with superficial therapy and created files portraying them as qualified patients receiving covered services. It also described discharging patients and scheduling their readmission as soon as Medicare rules allowed. The Justice Department’s account of the criminal case described patients with Alzheimer’s disease and dementia among those used in the scheme. The clinical paperwork made attendance look like covered treatment.

Medlink sat on the financial side of that arrangement. The superseding indictment alleged that its owners used it to charge ATC management fees for hiring employees, running operations and controlling finances, even though the leadership and management of the companies were the same. We see a treatment business using Medicare’s money to buy the patients needed to bill Medicare again.

How the Referral Money Moved

Management fees funded the kickback operation. The Eleventh Circuit’s criminal-case opinion states that American Therapeutic and American Sleep paid Medlink $20,000 per month per facility, which Medlink used to fund kickbacks. The court described cash deliveries to assisted-living facilities and halfway houses, along with payments to patient brokers who approached beneficiaries and paid them to attend ATC.

The court also described a broker who ran substance-abuse centers and made admission depend on having Medicare coverage and attending ATC. Someone without Medicare could stay only a few days. That arrangement connected a place to stay with a place to be billed for treatment. For the referral business, control over the patient’s housing helped keep the patient stream moving.

The fee had a business label. The cash bought patients.

The calculation behind those deliveries is the detail an accounts employee would recognize. The court described a Medlink employee whose full-time job was running the kickback operation:

The court then described her obtaining cash from Medlink’s president and shell companies beneath Medlink, filling envelopes and arranging delivery to referral sources. She also handled disputes with referral sources who believed they had been underpaid.

The same records used to track patients and Medicare claims told the employee what referral sources were owed. A management-company insider could see both the source of the money and the reason it left.

The indictment described how the cash supply was concealed. It alleged that ATC made regular payments to Medlink from accounts receiving Medicare money. Participants opened phony corporations and bank accounts, then used checks and wire transfers to move money to individuals and companies they controlled. They withdrew the money and returned cash to the owners for kickbacks.

The same criminal filing alleged recurring payments to people whose only function at Medlink or ATC was laundering money. The names on the checks obscured the work the money was doing.

How Patient Files Made the Claims Look Real

Altered clinical records supplied the appearance of eligible patients and necessary treatment. The superseding indictment charged that participants changed patient files and therapist notes in ATC’s computer system, while owners directed employees and doctors to alter diagnoses and medication types and levels. It also charged that doctors referred ATC patients to American Sleep even when they did not qualify for sleep studies.

The criminal court opinion supplies a concrete picture of how signatures kept the system moving. It describes a psychiatrist signing treatment plans he had not prepared and signing patient charts as fast as a medical records clerk could turn the pages. American Therapeutic’s president predetermined patient stays, and the decision to keep a patient depended on proximity to the maximum Medicare benefit.

Those details explain why a signed chart can be part of the scheme itself. The treatment plan represented a physician’s work. The recertification represented a continuing clinical need. In the court’s account, the physician supplied signatures while management controlled the stay.

What Medicare Was Billed and What It Paid

The criminal court opinion separates ATC’s claims from its receipts: American Therapeutic billed Medicare $199.4 million and received $85.7 million. American Sleep billed $5.8 million and received $1.8 million.

Medicare’s payments supplied the cash route. The Justice Department’s corporate-plea announcement says millions then moved into Medlink to conceal the fraud and finance kickbacks. American Sleep’s sleep-study billing supplied another source of Medicare money alongside ATC’s partial hospitalization claims.

The FBI and the Department of Health and Human Services Office of Inspector General investigated the case. The Justice Department brought it as part of the Medicare Fraud Strike Force.

What a Management-Company Insider Can See

We look at what a management payment purchased, who controlled its destination and how it connected to reimbursable patients. Here, the management fee led to shell-company transfers and cash, while billing summaries and patient logs supplied the calculation. An insider who understands one side of that relationship can explain why the paperwork does not tell the whole story.

Paying for Attendance: The Bournewood Parallel

Bournewood’s civil settlement shows another way payments can secure treatment attendance. In its settlement agreement, Bournewood acknowledged paying sober homes only while a patient enrolled in and attended its partial hospitalization program. Payments stopped when attendance stopped, regardless of the patient’s continuing housing need. The common issue is what the payment secured: access to a patient whose attendance generated treatment claims. At Medlink, the court followed cash envelopes. At Bournewood, the agreement described housing payments conditioned on attendance.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our whistleblower experts assess how the referral arrangement and billing evidence fit together.

You Know What the Payments Bought

If you worked with referral accounts, management fees or billing records that financed patient payments, tell our whistleblower experts how the money moved. We build the case around the decisions you witnessed, bring in behavioral health fraud whistleblower lawyers who understand referral payments, and remain your partners through the case.