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The $400 Million Swindle Psychiatry : Theft From The Public Purse.
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Cover Story

Non-existent Illnesses

One diagnosis used to hospitalize Canadians was “codependency.” But as the Toronto Star reported in 1991, the Ontario health ministry “...has no classification for codependency treatment and was surprised to learn that OHIP is paying for it.” Indeed, an examination of medical reference texts offered no insight into anything characterized as “codependency,” strongly suggesting that this “disorder” is pure fiction. Clinical psychologist Stan Katz, who was quoted in the article, put it somewhat more bluntly: “At best, dependency is a nutty idea, at worst a major scam that no one should pay for.” The fact that no such “mental illness” exists did not stop the psychiatric facilities involved in the fraud. Billings were laundered under other diagnostic categories acceptable to the insurers, such as “depression.” One hospital chain even had a memo that listed those diagnoses that health insurance companies would pay for, and which diagnoses were “more difficult to push through.”

Another scam involved the use of “dual diagnoses.” This device was used to get around the 28-day limit that OHIP and other insurers imposed. The patient would be diagnosed with one “illness” and then flipped to another one when the 28 day period expired.

In his book Bedlam: Greed, Profiteering and Fraud in a Mental Health System Gone Crazy, Joe Sharkey wrote of psychiatric hospitals that had entire units based on this concept: “At Fair Oaks Hospital, the NME [National Medical Enterprises] facility near Palm Beach, Florida, Canadian heroin addicts made up the majority of patients in the dual diagnosis unit, where treatment was based on a primary diagnosis, such as addiction, and a secondary one, such as adjustment disorder. In late 1991, a month after the province of Ontario sharply curtailed payments for treatment in U.S. psychiatric hospitals, the occupancy rate at the hospital dropped by half.”

These psychiatric hospitals also collected $17.5 million in the five-year period preceding 1987. All in all, psychiatric billings for alcohol and drug abuse treatment alone were at least $200 million. Documentation from the Ministry of Health suggests that total fraud perpetrated against Ontario was in the range of $400 million.

Despite widespread media coverage in the United States, this situation was only lightly touched upon in this country, having come to light through an expose done by the CBC. This involved an Ontario man who was circulated amongst a number of psychiatric hospitals in Texas, all of which billed OHIP for his “treatment.” He left Ontario a cocaine addict and returned one. On April 18, 1991, MPP Ernie Eves, currently the Deputy Premier of Ontario, addressed then Minister of Health Evelyn Gigantes: “The minister will be aware, of course, of the CBC interview last night with a particular patient who billed OHIP for drug treatment in the United States at six different institutions over a period of two years at the amount of $500,000. This money included such items as pills, group therapy and laundry.... He also says that he received $11,000 payable to him. When he did not fill out the appropriate OHIP claim forms, they sent him a cheque directly for $11,000.”

Mr. Eves then requested a report that was prepared by then – health minister Frances Lankin. The document was issued by the Ministry of Health on August 12, 1991, and revealed that over an 18-month period, U.S. psychiatric hospital substance abuse billings were $67,227,711—more than $3.7 million per month or almost a million dollars per week.

Although Canadians were treated from other provinces, Ontario became a prime target because OHIP offered the largest reimbursement rate, paying 75% of any bill up to $1,500 per day. In cases of emergencies, OHIP paid 100%.

The CBC’s “half million dollar man” was far from an isolated case and the story merely touched upon the proverbial tip of the iceberg. The intentional targetting of Canadians by the U.S. psychiatric industry was indicated in a report from a U.S. newspaper, the San Antonio Express.

“I couldn’t believe it, what they were allowing to happen,” said Tom Jackson, chief operating officer of the Twelve Oaks Hospital in Houston. “I made them aware of it. I talked to a staff person from the Ontario Ministry of Health, and sent them a letter telling them I thought it was a crying shame....” He said when he first realized so many Canadians were flocking to the area it did not make sense to him. “Now I don’t believe that many patients show up in Houston from Canada for treatment without something going on,” he said. “We learned through our clinicians in the field that it was becoming well-known in psychiatric hospital circles that the hospitals were filling their beds with Canadians.”

The Ministry’s 317-page report covered an 18-month period and showed that approximately 6,000 people were sent to the United States, an average of more than 300 per month. This was confirmed by the U.S. Immigration Department, which indicated that the average number of people being flown to American psychiatric hospitals from the Toronto international airport was around 300 per month, representing up to $30 million in potential billings per plane load.

They were bringing down so many patients that some of these hospitals had negotiated volume discounts with airlines. Court documents show that Community Psychiatric Centres, which had a branch in Toronto, worked with Travel Agents International and had negotiated arrangements with Canadian Airlines and American Airlines.

Canadians were also flown into the United States in violation of U.S. immigration laws. One Hamilton, Ontario, resident stated that prior to being sent to a psychiatric facility in California, the head hunter operation in her city wanted to know if she had a criminal record. According to her, criminals were separated out and sent to the United States in some different manner. Some of the people employed in the psychiatric harvesting operation had extremely questionable backgrounds, as this excerpt from a tape transcript of a meeting at one hospital revealed: “...When Joe came he had in his record that he had attempted murder on his wife 3 years ago. don’t want an attempted murderer and possibly even murderer on the unit. ...I don’t know if you know the whole story but Thursday the guy forearmed one of the kids playing ball and he put his arms around somebodies [sic]... threatened to choke them...”

Another staff member who dealt with Canadian admissions at one of these hospitals stated that “...To date there is next to no verifications of the Form I-94 [U.S. Immigration form] for any patient admitted to the program since October and very few patients with a referring physician.”

When it came to Canadians, even the amounts fraudulently billed were greater than for U.S. patients. For example, one facility in Washington State was found to have been billing Alberta Health $485 per day for the same “care” that was being charged to American health insurance providers at $340 per day, a difference of 30%.

Unqualified Practitioners

As touched upon earlier, one of the scams involved diagnosing patients with illnesses that did not exist. Phoenix Alcohol and Drug, a patient brokering operation, catered to these hospitals by supplying a constant flow of patients. They operated throughout southern Ontario and sent hundreds of Ontario residents to U.S. psychiatric facilities, where they were treated for the fictional “codependency” malady. Thus, OHIP (and Alberta Health which was also a victim of this device) and other health insurance providers would not pay for its treatment. In order to collect, the psychiatrists had to submit bills that reflected OHIP’s criteria, but that did not reflect the actual “diagnoses” and “treatment” the patient was given.

One Texas psychologist, John M. Cull, gave codependency seminars throughout Ontario and also worked in Alberta to recruit patients. One of his colleagues commented in a meeting that: “I have a concern that we are treating codependency while billing for payment under major depression with little to validate this diagnosis. ...Is the Canadian government paying for major depression or codependency?”

Cull received $1,050 per OHIP patient upon admission and another $280 per patient day. Documents obtained from the Texas Medicaid Fraud Investigation Unit revealed that his privilege to practice had already been seriously challenged.

According to these documents, “When Shelia Lee, Quality Assurance Director inquired of Rufus Hoefer, Hospital Administrator, in September of 1990 if Cull should be credentialed, he replied: ‘No need to do that; this is a business relationship. He is not going to be providing any clinical care.’ He couldn’t because of Bd. [board] restrictions.”

Psychiatric Facilities
Psychiatric facilities in the U.S. have fallen like dominoes as investigators catch up with evidence of massive insurance fraud.

There were, indeed, board restrictions: Cull had his licence to practice suspended between 1989 and 1993 by the Texas State Board of Examiners of Psychologists. The board found that Cull “formed a corporation for the delivery of professional services in a manner that is in violation of Board Rule 465.5; by submitting or causing to be submitted 3rd party insurance claims for professional services that were not in fact delivered.” The board further found that he “failed to follow established standards for supervision in his professional relations....” The initial complaint against Cull was filed by Aetna Life Insurance company. In 1990 and 1991, Cull was collecting Alberta and Ontario health dollars while under licence suspension.

As already indicated, although Canadians in general were sought after as psychiatric fodder, the most prized of all were Ontarians. This is reflected in Cull’s personal remuneration for acquiring Ontario residents: he was paid between $140,000 and $160,000 per month, approximately $2 million (Cdn) per year. A deal memo revealed that he was paid approximately $524,000 for codependency for the period of September 14, 1990, to December 31, 1990, a fee of almost $38,000 per week.

The $400 Million Swindle continued...
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