In Escobar vs. Universal Health Services, a Massachusetts couple’s daughter was treated at a counseling service that participated in the Medicaid program, MassHealth. The parents took their daughter, who was a MassHealth benefits recipient, to this service after she experienced behavioral problems at school. The daughter was treated by staff who had no professional license to provide mental health therapy. The parents became concerned when they began to recognize that the clinical director was not meeting with their daughter. The daughter was transferred to a different staff member, but this staff person was also unlicensed and proved to be unsatisfactory to the parents.
The third staff person held herself out to be a psychologist with a Ph.D., but was someone who trained at an unaccredited online school and was rejected for a professional license. This woman diagnosed the parents’ daughter with bipolar disorder. The daughter’s problems at school continued, and the school insisted that she see a psychiatrist in order to remain at the school. The parents relayed this to the “psychologist,” who referred her to a nurse, while calling her a doctor.
This fourth staff member then prescribed a medication called Trileptal for the purported bipolar disorder. The daughter quickly began having an adverse reaction to the drug. The daughter attempted to call the nurse for guidance, but her messages were unreturned. The daughter had a seizure a week after she took the medicine. The daughter was hospitalized, and the parents expressed their frustration at the counseling service for the lack of supervision and failure to return calls. The daughter had a second seizure a month later and died as a result.
The parents filed several complaints at different state agencies, including the Disabled Persons Protection Committee, the Division of Professional Licensure, and the Department of Public Health. The Department of Public Health found the parents’ claims of insufficient supervision and licensure to be valid, finding no documentation to show there was supervision for several years, some as long as 15 years.
The parents also pursued action against the counseling service under the federal False Claims Act (31 U.S. Code § 3729), alleging that as an entity that receives federal payments, it violated the law by holding out to the public that its facility was staffed with licensed professionals in order to obtain payment for services, even though they clearly were not licensed or supervised in any way. While cases filed under the False Claims Act are usually pursued by the government, the law allows for private persons to file on behalf of the government and potentially recover 15 to 25 percent of the amount awarded to the government.
The parents’ claim was dismissed in its entirety by the Massachusetts District Court. In its review, the First Circuit Court of Appeals assessed the intent of the False Claims Act, particularly what constituted fraud. In its analysis, the court looked at prior case law that differentiated between two categories of false submissions: those that are factually false and those that are legally false. Legally false claims can either be implied or expressed. The court then stated that it did not believe that distinction was necessary, since it would limit the types of claims that could be brought under the federal statute. The court felt that the parents properly pleaded the allegations of falsity made under the condition of payment, and that the counseling service knowingly submitted false claims to MassHealth.
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