State Investigation of Whistleblower Lawsuit Supports Medicaid Fraud Allegations Against Madison Center

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Jun 28, 2010, 02:24 ET

SOUTH BEND, Ind., June 28 /PRNewswire/ -- A recently completed investigation by the state of Indiana supports whistleblower allegations that Madison Center, a behavioral treatment organization in northern Indiana, for years actively sought troubled children to enroll in its programs to boost its Medicaid revenues but then failed to properly diagnose them and give them the treatment they needed.

Based on the state's investigation, the Office of the Attorney General of Indiana has filed notice in federal district court in South Bend that it will join the whistleblowers' Medicaid fraud lawsuit against Madison Center and is expected to file its own lawsuit today. Madison Center says it is the largest Medicaid provider in Indiana.

The whistleblowers – Jean Marie Thompson and Kathleen McCoy, who formerly worked for Madison Center – praised Indiana Attorney General Greg Zoeller and his office for their investigation of the allegations and the attorney general's decision to join the case and recoup taxpayer funds.

"We consider the attorney general's decision a victory for the children, who weren't getting the care they needed and deserved, even though the state was spending a great deal of money to get them that care," said Thompson, a psychologist who worked for Madison Center for five years.

Whistleblower ("qui tam") allegations

For more than 10 years, Madison Center actively sought and enrolled low-income, "problem students" from the local school system and enrolled them in its day treatment program. To boost its Medicaid revenues even more, Madison Center would convince parents that the siblings of those students also should be sent to Madison Center for treatment instead of school, the "qui tam" (whistleblower) lawsuit says.

But the children weren't properly diagnosed, and they were given little or no treatment to help them, according to the whistleblower lawsuit. Since the children's families were poor, Medicaid covered the Madison Center's charges for the treatment the children supposedly received. The state estimates it paid Madison Center more than $10 million in Medicaid payments for fraudulent billing charges.

The whistleblower lawsuit was filed in 2005 and is posted at http://www.phillipsandcohen.com/CM/NewsSettlements/Complaint%20-%20Madison%20Center.pdf.

The whistleblowers are:

Jean Marie Thompson – During her five years at the Madison Center, she worked in various positions, including children & adolescent intake coordinator. She has a PsyD, HSPP in clinical psychology.
Kathleen McCoy – She worked at the Madison Center for about 18 months, first as a therapist for children, then in the admissions office for children. She has a Master's degree in social work.

The two whistleblowers are represented by Colette G. Matzzie, a Washington, DC, attorney with Phillips & Cohen, and local counsel Shaw R. Friedman of Friedman & Associates P.C. Below are comments from the whistleblowers and attorney Matzzie.

Jean Marie Thompson:

"This was not just a case of problems with paperwork. Madison Center's failure to properly diagnose and treat children who needed help hurt those children, their families, and ultimately, the community.

"I also was concerned that Madison Center failed to provide the many inexperienced therapists that it employed the appropriate supervision and oversight they needed so that they could effectively treat their young patients and their families. Madison Center was all about boosting Medicaid revenues."

Kathleen McCoy:

"Madison Center depended on the local school system for patient referrals, and the school system relied on Madison Center to take care of problem students. The children didn't get the treatment they needed nor the educational services they needed. As a result, those students, most of whom were already failing, struggled even more. But no one was advocating for these children. That's why Jean Marie and I spoke up.

"It's not surprising that Madison Center is the largest Medicaid provider in the state, given how it operated. The school referrals combined with Madison Center's practice of persuading parents to send all of their children to its day treatment program even when only one child needed help was a big reason Madison Center raked in millions in Medicaid funds."

Colette G. Matzzie, the whistleblowers' attorney, Phillips & Cohen LLP:

"The Attorney General is to be commended for his efforts to recoup the millions of dollars in Medicaid funds that Madison Center collected through a cynical scheme to warehouse Medicaid eligible children in full-day hospitalization programs by falsifying the medical necessity of such treatment then failing to provide it. The decision to blow the whistle hurt my clients in their careers, but they did so because they thought to say nothing would hurt the children even more."

About Phillips & Cohen LLP

Phillips & Cohen LLP is the nation's most successful law firm representing whistleblowers. Qui tam lawsuits brought by Phillips & Cohen have resulted in civil and criminal recoveries totaling $5.3 billion. Phillips & Cohen also represents whistleblowers in cases involving major tax violations and securities laws violations. The firm's attorneys are regularly recognized for their successful work on whistleblower cases with inclusion on such select lists as the Top 10 "Winning Attorneys" in the U.S., the "100 Most Influential Lawyers" and the National Law Journal's Top 20 "Hot List" of plaintiffs' law firms. For more information, see www.phillipsandcohen.com.

SOURCE Phillips & Cohen LLP