Editor’s note: Olga Peters of The Commons contributed to this report.
[S]tate officials have launched a criminal probe of the Brattleboro Retreat in the wake of Medicaid fraud allegations raised repeatedly by a former employee.
The investigation, first reported by The Associated Press, was confirmed by Vermont Attorney General William Sorrell on Tuesday. And documents show that at least some of the state’s concerns arose from the complaints made by whistleblower Thomas Joseph, a controversial figure who has alleged millions of dollars of malfeasance at the Brattleboro psychiatric hospital.
“The investigation will be of broad scope,” said Bill Griffin, Vermont’s chief assistant attorney general. “We will look at the information, and decide how to proceed.”
The state auditor’s office requested that the attorney general’s office look into the matter. Hugh Pritchard, a senior auditor, told a lawyer at the attorney general’s office that a cursory review of documents obtained from Joseph showed “all three elements of the ‘fraud triangle’ were in place. Financial pressures forcing the Retreat to choose which of its obligations to meet; an opportunity to acquire funds by writing off credit balances; and a conjectural rationalization – that if payers do not request refunds then they do not want or deserve them.”
Also in the mix – apparently as an observer at this point – is the Centers for Medicare and Medicaid Services, a federal agency that administers those insurance programs. The Retreat has come under CMS scrutiny several times in recent years.
“CMS is aware of the ongoing investigation and will continue to monitor the situation closely,” spokeswoman Courtney Jenkins wrote in an email. “We will determine if additional action is required once the state’s investigation is complete.”
Retreat administrators are saying little. They were notified of the attorney general’s investigation last week.
“We were not provided any further detail regarding the scope of the investigation, except to say that the attorney general’s office would be contacting our attorneys in due course,” spokesman Jeff Kelliher wrote in a prepared statement. “The Retreat takes this matter very seriously. We are fully cooperating with state officials but are unable to comment further at this time.”
Joseph, in an interview Tuesday, praised the Vermont auditor’s office and said it was the first agency to take him seriously. The state investigation, he believes, “definitely gives my core allegations validation.”
Asked what result he was seeking, Joseph replied, “I want the Brattleboro Retreat to be held accountable for their ghastly behavior.”
The allegations
The probe comes years after Joseph, who worked for the Retreat from January 2011 to November 2013 as a self-pay collections representative, began complaining of financial wrongdoing at the facility.
Joseph alleges that the institution has overcharged patients and retained government money to which it was not entitled.
Joseph initially pursued a federal complaint. In an August 2013 letter to a federal prosecutor, Joseph’s attorney at the time, Michael Lesser, summed up his client’s arguments this way:
“The Retreat’s history of management issues and cash shortfalls has been well-document(ed) and led to the Retreat’s intentional and fraudulent billing and accounting practices. Instead of correcting its shortcomings and improving its business practices, the Retreat took a shortcut; it simply generated maximum government funds – through overbilling and accounting tricks – from federal and state government payers and retained overpayments.”
The federal government declined to pursue the matter after an initial investigation (Joseph claims this decision was based on budget cuts), and a judge last summer threw out Joseph’s federal lawsuit. Joseph had claimed that the Retreat defrauded the government of $11 million between 2005 and 2012, but U.S. District Court Judge William Sessions pointed to a lack of specific evidence and ruled that “[Joseph] provides no facts to indicate that anyone at the Retreat knew about allegedly unlawful retained government funds.”
Joseph apparently found a more sympathetic ear in state Auditor Doug Hoffer. In one of dozens of state documents released via a public records request, Pritchard, a senior auditor, wrote that one of Joseph’s allegations was that “when the Retreat received an overpayment, rather than return it, they would write off the resultant credit balance in the receivable account.”
“He also alleges that the Retreat deliberately double-billed in order to generate overpayments additional to those that are normally received for various reasons,” Pritchard wrote.
Pritchard added that, “based on [the state auditor’s office’s] very brief and incomplete review of the materials, it appears that there may be some substance to the allegations. We believe that the matter merits investigation, though the extent to which it has already been investigated is not apparent from the information received.”
The auditor’s office sought additional state resources to look into the claims. On May 1, Pritchard wrote to Steven Monde, an assistant attorney general with the Medicaid fraud unit: “I have not been through the entire set of documents that Thomas Joseph supplied, but I did see some specific instances that seemed to me to warrant investigation.”
Pritchard then highlighted two examples of possibly questionable billing. In both cases, the Retreat had reversed a patient’s expense.
For instance, an expense of $1,239 was listed but did not match any invoices. The Retreat wrote this expense off three years later as a “reversal discount from insurance,” a practice that is “at the heart of Joseph’s allegation,” Pritchard wrote.
In his second example, Pritchard noted a series of patient expenses for which Medicaid reimbursed the Retreat. A portion of these expenses were written off because Medicaid did not pay the entire bill – a practice he deemed proper – but an additional reimbursement caught Pritchard’s attention.
“It is a receipt applied to the wrong patient or the wrong charges,” he wrote. “In that case, it becomes difficult to disentangle what happened – which is a poor way to manage accounts receivable but a good way to disguise malfeasance.”
Pritchard also, in a March document, detailed his review of the Retreat’s finances from 2011 to 2013 and made a theoretical connection to possible fraud.
“[The records] show a negative cash balance [cash minus overdraft minus line of credit] of a few hundred thousand dollars at December 2011 and 2012, and of almost two million dollars at December 2013. This suggests financial pressures, although it is not definitive evidence,” Pritchard wrote.
The exact nature of the attorney general’s investigation – and how much it utilizes information from Joseph – is unclear. State documents both credit Joseph and cast doubt on his claims.
Griffin said only that, in a criminal investigation, the attorney general’s office determines the potential for a criminal charge and from there “matches activity to the statutes.”
Notes from a May 5 phone conversation state that an official from the Vermont Department of Health was starting work on a similar allegation regarding the Retreat.
Reaction
News of the attorney general’s investigation provoked varying reactions on Tuesday. A spokesman for Gov. Peter Shumlin’s office declined comment, referring questions to the attorney general’s office.
State Rep. Ann Pugh, D-South Burlington, and chairwoman of the House Human Services Committee, was reluctant to draw any conclusions from the fact that the Retreat is under investigation.
“I have really no ability to comment on what it is and what it isn’t,” Pugh said.
For Pugh, it would be “an exercise in guesswork” to predict whether her committee might act on the matter – or seek more information – when the Legislature reconvenes in January. But she did say that, “clearly, the role of the Human Services Committee is to be there to shine a light, to understand what’s going on, to see what’s working and what isn’t working and what needs to be fixed.”
Pugh added that “the Retreat is an essential element in our mental health system … so any trouble the Retreat may be in is concerning.”
The Brattleboro Retreat has taken on an increasingly important role in the state’s decentralized mental health system. After Tropical Storm Irene, the private hospital, which offers psychiatric and substance abuse treatment, began to take state patients, including children in state custody.
Rep. Mike Mrowicki, D-Putney, said the Human Services Committee – on which he also serves – recently held a hearing on mental health delivery issues in Vermont.
“The money that’s spent on mental health services – we have to provide due diligence and oversight,” he said.
But Mrowicki also lauded Retreat administrators.
“I’m confident that the funds we’re spending are buying the services we hope for,” Mrowicki said. “The Retreat has been very open about inviting legislators and other stakeholders in to see what’s happening there … I think there’s a lot of good work going on.”
Rep. Anne Donahue, R-Northfield and a longtime advocate on mental-health issues, said it is “always important to recognize that an investigation is just that: There may be smoke, but we don’t know for sure whether there is a fire yet.”
“However, these are very clearly serious allegations, and there appears to be enough issues identified to warrant a significant investigation,” Donahue wrote in an email.
Donahue, who serves on the House Health Care Committee and served on the defunct Joint Mental Health Oversight Committee, said she believes the Retreat has been “trying to preserve relevance and, indeed, its survival, in a time when integration of health care – not freestanding psychiatric institutions – is state-of-the-art.”
The facility’s financial and regulatory issues, she added, “continues to put Vermont in a very difficult situation, when a critical partner is at risk. We are in an ongoing crisis for adequate acute care hospital space, with continued long waits in emergency rooms for admission despite the opening of [Vermont Psychiatric Care Hospital].”
“The Retreat has been forced to weight financial issues heavily in its attempts to survive, and hopefully fraud is not a route it chose toward that end,” Donahue said.
