Cedars-Sinai Accused of Misusing Federal Aid : Health: House subcommittee says the L.A. center and others have not served the mentally ill as required.

Up to $100 million in federal funds has been spent on community mental health centers that have failed to provide required services, a House panel charged Friday, citing Cedars-Sinai Medical Center in Los Angeles as a prime offender.

A Cedars-Sinai representative responded that the mental health facility is more than meeting its obligation to the community’s mentally ill.

Allegations against various mental health centers were contained in a report of the House Government Operations subcommittee, which said that many of them have refused to serve indigent mentally ill patients even though they agreed to do so as a condition of receiving the federal assistance.

In addition, some institutions used construction grants to build swimming pools, tennis courts and other questionable amenities, according to the subcommittee.

The federal government dispensed a total of $295 million in construction grants and related assistance from 1964 through 1980 to develop community mental health centers, which are legally obligated to maintain federally approved standards of care for 20 years.

Those standards include specified levels of inpatient and outpatient services, short-term hospitalization, 24-hour emergency services, consultation and education. They also obligate the facilities to accept patients regardless of their ability to pay.

The subcommittee, which forwarded its findings to the General Accounting Office for investigation, found that at least some of the required services were not being provided at up to half of the 575 facilities that received construction grants and assistance.

The grant program “has apparently wasted a significant proportion of its funds on for-profit facilities that refuse to provide services to the poor,” said Rep. Ted Weiss (D-N.Y.), chairman of the subcommittee.

The subcommittee also criticized the National Institute of Mental Health, which is responsible for policing the federally supported facilities.

The panel’s report said the institute had exercised “virtually no oversight,” even over those community mental health centers identified as “having major problems” in a separate three-year investigation conducted under contract by a private auditing firm.

The audit by Continuing Medical Education of Mt. Airy, Md., found that about one-fourth of the 158 centers inspected by the firm were “blatantly out of compliance with the laws under which they were established.”

Dr. Alan Leshner, deputy director of the National Institute of Mental Health, conceded that the agency had rarely taken action to address abuses by demanding the return of federal funds.

“It seemed at the time that it would be better to have some services provided than to have the money go back into the federal Treasury and have no benefits for the mentally ill at all,” Leshner said in an interview.

Nonetheless, Leshner said the institute is moving against Cedars-Sinai and 15 other facilities accused of not complying with terms of their grants and it plans to inspect 105 mental health centers by Sept. 30.

Cedars-Sinai is accused of turning its Thalians Community Mental Health Center into a profit-making venture, illegally housing a diabetes clinic at the facility and referring indigent mental patients to other institutions.

In 1973, Cedars-Sinai received a $1.4-million grant to build the three-story mental health center. In addition, it received about $6.6 million in federal assistance from 1973 through 1981 to help pay the salaries of staff at the new facility.

Cedars-Sinai spokesman Ron Wise said the placement of a diabetes clinic in a facility supposedly reserved for mental patients is offset by emergency mental services offered in the hospital’s main building.

Wise said the hospital has an August, 1988, letter from NIMH stating that Cedars-Sinai was in compliance with the program’s requirements.

Wise also noted that Thalians treats “a considerable number of patients at no charge.”

That account was disputed by subcommittee staff members, who as part of their probe telephoned Cedars-Sinai and represented themselves as patients seeking treatment.

The investigators said that even when they identified themselves as unemployed and without income, Cedars-Sinai quoted them prices of $14.40 or more for a 45-minute counseling session.

The House panel’s findings were supported by an independent study also released Friday by Public Citizen, a consumer advocacy group founded by Ralph Nader.

The mental health centers “have essentially taken the money and run, violated the conditions under which they received the federal construction money,” said Dr. Sidney Wolfe, director of Public Citizen’s health research group.

Staff writer Alan Citron in Los Angeles contributed to this story.