Minnesota Mental Health Nonprofit And Its Leaders To Pay $4.5 Million To Resolve Fraud Allegations

Acting United States Attorney Gregory G. Brooker and Minnesota Attorney General Lori Swanson today announced that Complementary Support Services and its related entities (collectively “CSS”), TERI DIMOND and HERBERT STOCKLEY have agreed to pay a total of $4.52 million to resolve allegations that they violated the False Claims Act (FCA) and Minnesota False Claims Act by defrauding Medicaid, a program jointly funded by the federal government and State of Minnesota to provide health care to low-income Minnesotans. CSS will pay the government $4 million, DIMOND agreed to pay $400,000, and STOCKLEY agreed to pay $120,000.

According to the allegations in the complaint, CSS, led by DIMOND and STOCKLEY, provided in-home mental health services to children and adults through two programs funded by the Medicaid program: Adult Rehabilitative Mental Health Services (“ARMHS”) and Children’s Therapeutic Services and Supports (“CTSS”). Both programs restrict reimbursement to time spent providing face-to-face services with the patient, and prohibit reimbursement for a therapist’s time completing paperwork. In addition, both programs require patient care to be clinically supervised by a licensed therapist, like a social worker or psychologist, to ensure that the services being paid for by taxpayers are appropriate and medically necessary.

According to the allegations, between January 1, 2007 and April 8, 2016, CSS billed Medicaid for claims while knowingly violating clinical supervision requirements. During most or all of this time period, CSS did not engage licensed professionals who agreed to accept full professional responsibility for the actions and decisions of unlicensed direct service providers. Rather than submitting claims that reflected signature by licensed professionals serving as clinical supervisors, DIMOND “batch signed” CSS progress notes that formed the basis for billing Medicaid over the years. Since January 1, 2007, CSS submitted to Medicaid more than 85,000 claims for payment. These claims represent hundreds of clients serviced by unlicensed staff members across multiple regions within the State of Minnesota. These client files could not have been, and were not, reviewed and supervised as required by law.

According to the allegations, CSS also impermissibly billed Medicaid for time completing paperwork since January 1, 2007. Specifically, CSS employees, at the direction of DIMOND and STOCKLEY, routinely added an extra billable unit for paperwork time for each client visit, fraudulently representing the added unit as face-to-face time. This practice resulted in thousands of additional billable units paid for by Medicaid in direct violation of state law.

Assistant U.S. Attorney David Fuller said, “These settlements reflect our Office’s commitment to take decisive action against health care providers who seek financial enrichment by taking advantage of federal health care programs. We thank our law enforcement partners, the whistleblower, and our colleagues at the Minnesota Attorney General’s Office for their assistance in recovering these Medicaid funds.”

“Providers of mental health services have an obligation to ensure that patients receive treatment that is necessary, appropriate and is administered with proper clinical supervision,” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. “To deviate from legal requirements in order to maximize profits and potentially jeopardize patient safety and well-being is completely unacceptable. The OIG will continue to work with our law enforcement partners, prosecutorial authorities and the public to identify, investigate and hold accountable those who seek to wrongfully obtain vital taxpayer dollars.”

The government’s investigation also revealed that DIMOND transferred $2 million in Medicaid funds from CSS to a nonprofit entity she started in Wisconsin. The government seized the $2 million in allegedly ill-gotten gains in June of 2016. In a negotiated civil forfeiture resolution, the government will retain $1.75 million of these alleged proceeds of the healthcare fraud scheme, bringing the government’s total recovery to $6.27 million in alleged proceeds of Medicaid fraud.

As a part of the settlements, CSS is permanently excluded from participating in federal and state health care programs. CSS’s patients were transferred to other providers of CTSS and ARMHS services. DIMOND agreed to an exclusion from federal and state health care programs for a period of not less than 8 years, and STOCKLEY agreed to an exclusion from state health care programs only for a period of not less than 5 years. Excluded providers or entities cannot participate in any way in the submission of claims to government health care programs.

These settlements resolve allegations filed in a civil lawsuit originally brought by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government for false claims and to share in any recovery. The government often relies on whistleblowers to bring fraud schemes to light that might otherwise go undetected.

In these civil settlements, Defendants CSS, DIMOND, and STOCKLEY have denied allegations of wrongdoing.

The case was handled by the Civil Frauds Unit of the U.S. Attorney’s Office for the District of Minnesota and the Medicaid Fraud Control Unit of the Minnesota Attorney General’s Office, with assistance from the Office of Inspector General of the U.S. Department of Health and Human Services.

The case is United States of America and the State of Minnesota ex rel. William L. Schwandt v. Complementary Support Services, CSS South, LLC, CSS Central, LLC, CSS North, LLC, CSS Metro, LLC, Clinical Support Services, LLC, Teri Dimond, and Herbert Stockley, Civil No. 13-CV-1018 (PJS/SER). The claims resolved by these settlements are allegations only; there has been no determination of liability.

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United States Attorney’s Office, District of Minnesota: (612) 664-5600