FOR IMMEDIATE RELEASE                                         CIV
WEDNESDAY, MAY 8, 1996                             (202) 616-2765
                                               TDD (202) 514-1888


     WASHINGTON, D.C. -- A New Mexico psychiatrist convicted of
228 counts of criminal health care fraud and a hospital he
partially owned will pay the United States a total of $700,000 in
civil penalties for submitting false claims for payment under
three federal health insurance programs, the Department of
Justice announced today.
     The settlement approved by the court April 29 requires Dr.
James D.C. Jaramillo of Albuquerque to pay $600,000 and Memorial
Hospital, also of Albuquerque, to pay $100,000 to settle
allegations they defrauded the Medicare, Medicaid and CHAMPUS
programs from 1990 through 1992, said Assistant Attorney General
Frank W. Hunger of the Civil Division and U.S. Attorney John J.
Kelly of Albuquerque.  CHAMPUS is a federal health insurance
program for the military.  The government suffered estimated
losses of $300,000.
     The case was filed in 1992 as a qui tam suit in U.S.
District Court in Albuquerque. 
     The Department said Jaramillo billed Medicare, Medicaid and
CHAMPUS for psychiatric services that were not provided or were
provided by a non-physician assistant without appropriate
     The civil judgment follows Jaramillo's 1995 conviction in
U.S. District Court in Albuquerque on 228 counts of criminal
fraud related to the same allegations.  Jaramillo was sentenced
to five years probation as a result of that conviction, and he
has been excluded from participating in the three programs as a
result of his fraud.  Jaramillo has appealed his conviction and
the government has cross-appealed, claiming Jaramillo should have
received prison time under the federal sentencing guidelines.  
     Memorial Hospital, according to the Department, billed
Medicare for hospital care provided to Jaramillo's patients when
they did not require hospitalization and failed to provide
"active treatment" for psychiatric patients as required by
Medicare.  Under the "active treatment" guidelines, Memorial was
required to ensure that patients were treated pursuant to an
established plan that was supervised and monitored by Dr.
Jaramillo or another physician.  Jaramillo was a part-owner of
Memorial Hospital at the time of the alleged false claims.
     At the request of the Office of the Inspector General of the
Department of Health and Human Services, Memorial agreed, as part
of the settlement, to ensure future compliance with applicable
Medicare laws, rules and regulations. 
     The case was conducted by the Department's Civil Division,
the U.S. Attorney's office in Albuquerque, the FBI, HHS' Office
of Inspector General, the New Mexico Department of Human Services
and the Defense Criminal Investigative Service.
     Under the qui tam provisions of the False Claims Act, a
private party can file a complaint on behalf of the federal
government and receive a portion of the damages if the United
States takes over the case and prosecutes it successfully.