Feds: Firm Used Alzheimer's and Dementia Patients for Medicare Scam

Oct. 21, 2010— -- A federal government strike force today charged that Alzheimer's and dementia patients living in Miami assisted-living facilities were exploited in a fraud that netted an estimated $200 million in bogus Medicare payments.

American Therapeutic Corporation (ATC), which operates a chain of community mental health facilities, is accused in court documents of paying kickbacks to owners and operators of assisted-living facilities, who in turn provided ATC with patients. The facilities, the government charged, often offered up Alzheimer's and dementia patients who did not have the ability to recognize they were being exploited.

According to the indictment, in many instances, some healthy residents of the assisted-living facilities who agreed to go along with the scam received a portion of the kickbacks as well. Then the company allegedly billed Medicare for counseling and mental health services for these patients that were not medically necessary, or were not provided at all.

The scheme outraged even veteran prosecutors.

"Since the strike force began operation, we have rarely seen anything like the illegal conduct charged in this indictment, both in terms of the nature and size of the scheme," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "The strike force is committed to finding and prosecuting individuals and companies who aim to cheat the American taxpayer in this way."

Court documents also allege that patient charts and notes from therapy sessions were routinely altered at ATC in order to make it appear that the patients qualified for treatments when, in fact, they did not. The government also charged that company principals manipulated the length of patients' stays in order to maximize the number of days Medicare would pay for mental health services.