University Behavioral Health of El Paso: Personal-Services Payments and Psychiatric Referrals

In the University Behavioral Health of El Paso fraud case, the hospital paid $860,000 to settle allegations that physician payments bought Medicare referrals under a personal-services agreement. If you worked with the agreement, the payments or the hospital’s admissions, the connection between them is the heart of this case.

The Department of Justice announced the civil settlement on February 9, 2017. It alleged that University Behavioral Health of El Paso LLC paid a physician above fair market value or for services the physician did not perform, in return for referrals to the hospital. The government alleged that the hospital submitted false Medicare claims for the referred patients’ care. The settlement resolved False Claims Act allegations involving the Anti-Kickback Act and the Stark Law.

The Services Agreement Behind the Referrals

The government’s allegation joined the hospital’s payments to the physician with the physician’s referrals back to the hospital. The professional-services agreement was the alleged cover for that exchange. According to the government, payments went out under a services contract, patients came in through the physician, and the hospital billed Medicare for their care.

That is why the services themselves matter. The government described payments above fair market value or payments for services not rendered. Those are different ways a contract can conceal what a hospital is paying for. In the first, the question is what justified the price. In the second, it is where the promised work went.

We see the absurdity in the government’s account: the hospital allegedly paid for professional services to buy the delivery of patients. Expertise on the label. Referrals in return.

The Justice Department explained the patient interest behind both laws: federally reimbursed health care should reflect the patient’s needs rather than the referring physician’s financial interests. A financial incentive at the referral decision reaches beyond the hospital’s accounts. It reaches the choice of where a patient receives psychiatric care.

A Hospital Acquisition and an Agreement That Continued

The Federal Trade Commission’s acquisition analysis identifies Universal Health Services as the buyer and University Behavioral Health of El Paso as the Ascend Health Corporation facility it would acquire.

The physician agreement began under a previous owner and continued after UHS acquired the hospital in October 2012. According to the settlement announcement, UHS ended the agreement effective December 31, 2013. The settlement covered certain Medicare claims submitted from February 1, 2010, through that termination date.

The hospital had also changed names. The announcement identified University Behavioral Health as the hospital then known as El Paso Behavioral Health System. An employee who knew the facility under the later name could therefore be looking at the same hospital’s earlier physician arrangement.

The hospital changed hands. The physician agreement carried on. For an insider who worked through the acquisition, that continuity is the important part: the arrangement described by the government crossed the ownership change before UHS ended it.

Why Local Psychiatric Referrals Mattered

Referral relationships were a business asset in the local psychiatric market. In its separate review of the proposed acquisition, the FTC identified the need to develop strong relationships with local patient referral sources as an obstacle to opening a competing facility.

The Civil Payment and the Investigation

The U.S. Attorney’s Office for the Western District of Texas and the Federal Bureau of Investigation conducted the investigation, with assistance from the U.S. Department of Health and Human Services, Office of Inspector General.

This physician-payment settlement is separate from UHS’s broader behavioral-health resolutions announced in 2020.

What Evidence Is Needed to Prove Fraud?

For the referral arrangement alleged here, the useful evidence connects what the physician was paid, what services the payment supposedly purchased, what work occurred and which referrals led to Medicare claims. Our work with an insider is to understand how those facts fit together.

You may know the professional arrangement from a clinical role, the compensation from a financial role, or the referral pattern from admissions. We help assess what that particular view could mean for a healthcare fraud case. We focus on the business reason for the payment and the work behind it, then connect that account to the hospital’s claims.

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

You Know What the Agreement Bought

If you know why a psychiatric hospital paid a referring physician, speak to one of our Whistleblower Experts about the arrangement. We work beside you to build the case around the services, payments and referrals, bring in behavioral-health whistleblower lawyers who know physician-referral cases, and remain your partners as the case moves forward.