Federal Court Allows Government’s Medicaid Fraud Suit to Move Forward

Late last month, a federal court in Virginia ruled that the government may proceed with a False Claims Act suit against a juvenile psychiatric facility run by subsidiaries of Universal Health Services, Inc.  The suit alleges that the Marion Youth Center, a treatment center for adolescent boys, submitted false claims to Medicaid.  Specifically, the government claims that the defendants falsely represented that they provided inpatient psychiatric services to children covered by Medicaid.  In reality, the government claims that the facility failed to provide psychiatric treatment and instead operated like a detention facility, submitting bills to Medicaid for what amounted to little more than confinement.  The government also alleges that the facility deliberately provoked and taunted children on Medicaid to create a pretext justifying longer stays for the children, thus increasing the Marion Youth Center’s Medicaid billings and payments.

The defendants had moved to dismiss the suit, arguing that the government failed to allege a violation of the False Claims Act, or a similar Virginia anti-fraud law.  The court agreed as to parent company UHS, but held that the case may proceed against two UHS subsidiaries that operate the Marion Youth Center.  The government is now seeking to amend its complaint to add detailed allegations that UHS supervised and controlled operations, including Medicaid billing, at Marion.

For more information see:  http://online.wsj.com/article/BT-CO-20100809-711002.html?mg=com-wsj