Fish and the U.S. Department of Justice Settle Medicaid Fraud and Abuse Case at Southwood Psychiatric Hospital in Pennsylvania

Prosperity, PA, April 23, 2009 — Fish & Richardson announced today that it, along with the U.S. Department of Justice, settled a lawsuit that had alleged substantial Medicaid fraud and the abuse of children at for-profit residential treatment facilities operated by Youth and Family Centered Services and its subsidiary Southwood Psychiatric Hospital (YFCS) in Pennsylvania. Fish represented Dr. Stefan P. Kruszewski, a board certified psychiatrist who had discovered and exposed fraud and abuse, but was then fired from his position as a medical consultant for the Bureau of Program Integrity in Pennsylvania’s Department of Public Welfare. The United States government intervened to seek a resolution with regard to certain activities occurring in 2005. Under the settlement, YFCS, in addition to agreeing to pay a $150,000 fine to reimburse federal Medicaid funds, has agreed to implement comprehensive new treatment standards, an extensive compliance program, as well as increased government oversight of their programs. This settlement is the first resolution by the United States of a failure of care case involving Pennsylvania psychiatric residential treatment facilities.

YFCS runs three residential facilities in Pennsylvania for children aged 6 to 18 who have been deemed to require psychiatric care by the state. The government intervened in Dr. Kruszewski’s case to address a wide variety of serious quality of care concerns at these facilities, including woefully inadequate staffing and use of physical restraints which posed significant risks to the health and safety of the children housed in the YFCS facilities. As a result, YFCS allegedly submitted Medicaid reimbursement requests for inadequate or worthless treatment.

“This was a case of the exploitation of children for profit,” said Thomas Halkowski, a principal of Fish & Richardson in the firm’s Wilmington office, who represented Dr. Kruszewski in the case. “Dr. Kruszewski should be commended for having the courage to come forward to protect this vulnerable group from further mistreatment. Because of his actions, we now have an agreement that provides a new standard of care to help safeguard the well being of those children in Pennsylvania who are housed in YFCS’s facilities. This agreement should also be a warning shot across the bow of other residential treatment facilities in Pennsylvania of the level of care they should be administering to Pennsylvania’s children.”

Because the Medicaid payments were administered through a joint federal/state Medicaid program, the U.S. government intervened in the case and became a party to the lawsuit and settlement agreement. The federal government has reserved the right to bring criminal charges and to exclude YFCS from Medicaid reimbursement programs in the future.

About the Attorneys
Thomas L. Halkowski is a Principal in the Wilmington, Delaware office of Fish & Richardson, where he focuses his practice on intellectual property and other complex litigation, including False Claims Act litigation. He was previously a Senior Trial Attorney for the United States Department of Justice.