Whistleblower suit alleges fraud by Madison Center

Posted on : 27-06-2010 | By : Joshua Parker | In : Credit Cards Articles

Tags: Center, Madison Center

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SOUTH BEND —Two former Madison Center employees have filed a whistleblower’s lawsuit, alleging the organization defrauded the state of more than $10.7 million by filing bogus Medicaid claims.

The suit, filed by former employees Jean Marie Thompson, a psychologist, and Kathleen McCoy, a therapist, alleges that Madison Center from 2000 through 2003 filed false claims, with fraudulent intent, for care purportedly given to children.

According to the suit, the false claims included:

Referring Medicaid-eligible children to day treatment/partial hospitalization without performing a clinically adequate assessment of the child’s background or mental health needs.

Instructing staff to enroll siblings of child patients in treatment, regardless of whether they needed care.

Maintaining many children in day treatment, up to 12 hours per day, with no or inadequate documentation supporting the necessity of that level of care.

“Madison Center’s illegal conduct amounts to a fraudulent scheme to enrich itself and key employees at the expense of the Medicaid program without serving the needs of the at-risk population of children it purports to serve,” the suit alleges. “As a direct result of defendant’s improper practices, the federal treasury and the treasury for the state of Indiana have been damaged in substantial amount.”

Thompson and McCoy first filed the suit in 2005, but it was kept under seal, as required by the federal and state False Claims Acts, commonly referred to as the “Whistleblower Acts.” Such suits remain under seal while the government investigates the allegations.

U.S. District Judge Robert L. Miller Jr. lifted the seal Thursday, on a request from Indiana Attorney General Greg Zoeller.

Zoeller filed a motion to intervene in the case, meaning the state will join Thompson and McCoy as plaintiffs within 30 days.

The news comes about two months after a Tribune investigation documented Madison Center’s precarious financial situation. The nonprofit community mental health center this year has been restructuring and dramatically cutting costs under pressure from creditors.

Interim CEO Ken Davis, brought in by the board of trustees as part of that restructuring effort, said Friday that he could not comment in detail on the lawsuit because he had not yet received a copy of it. Davis said Madison Center’s lawyers have been negotiating a settlement with the state since 2005.

“Madison Center isn’t sitting on an extra $10 million, we all know that,” Davis said. “Madison Center clearly is not able to make a payment of any significant amount. Obviously nothing has been resolved to the satisfaction of all parties. I assume that’s why they decided to file and seek legal recourse.”

Thompson, reached Friday by The Tribune, said she has not practiced since being forced out of Madison Center in 2005.

“For most people who step forward and say, ‘This is wrong,’ this is a very tough road,” said Thompson, of Osceola. “It’s not a popular spot.”

The law allows plaintiffs in False Claims Acts to recover triple the damages if fraud is proven, which could mean a more than $32 million judgment should the plaintiffs prevail.

Indiana code also could allow Thompson and McCoy as a pair to keep between 15 percent and 25 percent of any judgment, with the remainder going to the state.

Thompson said she does not worry about what impact that could have on the availability of mental health care in the area.

“I don’t know about their financial status,” Thompson said. “I hope it will improve care, however that is provided in the community. I have confidence that there are other agencies interested in providing that care and stepping forward.”

Staff writer Jeff Parrott:
jparrott@sbtinfo.com
(574) 235-6320