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Press Release

Residential Youth Treatment Facility for Medicaid Recipients in Marion, Virginia Agrees to Resolve False Claims Act Allegations

For Immediate Release
Office of Public Affairs
Will Pay $6.85 Million to Settle Allegations of Providing Substandard Adolescent Psychiatric Services

Universal Health Services Inc. (UHS) and two subsidiaries have reached a settlement in a False Claims Act lawsuit with the United States and the Commonwealth of Virginia, the Justice Department announced today. Under the settlement, UHS and its subsidiaries, Keystone Education and Youth Services LLC and Keystone Marion LLC, which did business as the Keystone Marion Youth Center, a residential facility in Marion, Va., agreed to pay $6.85 million to the United States and the commonwealth to settle allegations that they provided substandard psychiatric counseling and treatment to adolescents in violation of Medicaid requirements, falsified records and submitted false claims to the Medicaid program. UHS closed the Marion facility earlier this year.


This settlement resolves a whistleblower lawsuit filed by Megan Johnson, Leslie Webb and Kimberly Stafford-Payne, former therapists at the closed facility. UHS and its subsidiaries have paid an additional amount under the terms of the agreement to the former therapists to settle their separate discrimination and attorney’s fees claims. The United States and the Commonwealth of Virginia had intervened in the lawsuit on Nov. 4, 2009.


Under the False Claims Act, an entity that submits false or fraudulent claims to the government is liable for three times the government’s damages, plus a civil penalty for each false claim. The claims settled by this agreement are allegations only; there has been no determination of liability.


“The Justice Department is committed to investigating cases in which health care providers have put patients at risk by failing to meet the appropriate standards of care,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.  “Today’s settlement demonstrates our commitment to protecting the integrity of the Medicaid program and making sure that patients who rely on federal health programs receive the care they deserve.”


“This settlement resolves disturbing allegations that Universal Health Services Inc. and its subsidiaries in Virginia made false records and presented false claims to Virginia Medicaid in connection with sub-standard care to emotionally troubled youth at a residential treatment facility in Marion, Virginia,” said Timothy J. Heaphy, U.S. Attorney for the Western District of Virginia. “This result, which provides substantial reimbursement to the Virginia Medicaid program, demonstrates our strong partnership with the Virginia Attorney General’s Medicaid Fraud Control Unit and our commitment to use all available means, including civil remedies under the False Claims Act, to combat health care fraud.”


“Any organization providing substandard health services then sending inflated bills to taxpayers, as UHS is alleged to have done, can expect intense scrutiny by government investigators,” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services.  “Those intent on defrauding our programs should know that we will continue to work closely with State law enforcement agencies to fight Medicaid fraud.”


“This settlement, which returns a substantial sum to the Virginia Medicaid program, is a testament to the strength of such a collaborative partnership,” said Ken Cuccinelli, Virginia Attorney General. “This case sends a clear message that fraud and exploitation of our most vulnerable citizens will not be tolerated in the commonwealth.”


Acting Assistant Attorney General Delery acknowledged the efforts made by the U.S. Attorney’s Office for the Western District of Virginia, the Virginia Attorney General’s office, the Civil Division of the Justice Department, the Department of Health and Human Services’ Office of the Inspector General and the Commonwealth of Virginia’s Medicaid Fraud Control Unit.


This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $6.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are more than $9 billion.

Updated September 15, 2014

Press Release Number: 12-391