Kusserow on Compliance: Hospital President Convicted of $158 Million Medicare Fraud

It is not often a hospital CEO is convicted of felony charges. This is the case in Houston, where a federal jury convicted Earnest Gibson III, the former president of Riverside General Hospital (Riverside) of conspiracy to commit health care fraud; conspiracy to commit money laundering; and conspiracy to pay kickbacks, as well as related counts of paying and receiving illegal kickbacks. Other members of the conspiracy included his son, Earnest Gibson IV, the operator of one of Riverside’s satellite locations, and Regina Askew, a group home owner. Robert Crane, a patient recruiter, was convicted of conspiracy to pay and receive kickbacks. Ten defendants have now been convicted in connection with the fraud scheme involving false claims for mental health treatment. The scheme submitted $158 million in claims to Medicare for partial hospitalization program (PHP) services purportedly provided by the hospital to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided. The proceeds from the health care fraud were used to promote the scheme by paying kickbacks to patient recruiters and owners of group homes in exchange for sending Medicare beneficiaries to the hospital’s PHPs.

The Department of Justice noted that the conspiracy “systematically defrauded Medicare, treating mentally ill and disabled Americans like chits to be traded and cashed out to pad their own pockets. For over six years, the Gibsons and their co-conspirators stuck taxpayers with millions in hospital bills, purportedly for intensive psychiatric treatment. But the ‘treatment’ was a sham—some patients just watched television all day, others had dementia and couldn’t understand the therapy they supposedly received, and other patients never even went to the hospital at all”.

Evidence presented at trial indicated the defendants caused the submission of false and fraudulent claims for PHP services to Medicare through the hospital. A PHP is a form of intensive outpatient treatment for severe mental illness. Medicare beneficiaries for whom Riverside and its satellite locations billed Medicare for PHP services did not qualify for or need PHP services. Moreover, they rarely saw a psychiatrist and did not receive intensive psychiatric treatment. In fact, some of the Medicare beneficiaries were suffering from Alzheimer’s and could not actively participate in any treatment even if they actually qualified to receive PHP services. Furthermore, kickbacks were paid to patient recruiters and to owners and operators of group care homes, in exchange for those individuals delivering ineligible Medicare beneficiaries to the hospital’s PHPs. Patient recruiters were also paid in exchange for delivering ineligible Medicare beneficiaries to the specific PHP.

Riverside General Hospital, a psychiatric hospital with 88 beds, is a historic institution in Houston. It was the subject of adverse action last August when they were forced to surrender its substance abuse treatment license. It has been speculated that the very survival of the hospital is questionable.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.