UCI Hospital Investigated in Medi-Cal Fraud

The state attorney general’s Bureau of Medi-Cal Fraud said Wednesday it is investigating complaints that UCI Medical Center falsified prescription drug records and improperly billed the state.

UCI’s internal audit department is investigating more detailed allegations that doctors at the medical center’s psychiatric unit illegally billed Medi-Cal for anti-psychotic research drugs being given to patients, falsely labeled those drugs and kept two sets of medical records to hide the practice from Medi-Cal, which does not pay for research.

The inquiries come at a time when the financially troubled UCI Medical Center is negotiating a new contract with Medi-Cal authorities. With the medical center losing nearly $12 million for the fiscal year that ended June 30, hospital officials are seeking higher reimbursement rates for treating Medi-Cal patients.

Complaints that launched the internal inquiry were made in February, 1990, by two UCI psychiatrists and an administrator for the audit department. Letters written by them, copies of which were obtained by The Times, were sent to Drs. William E. Bunney and Donald B. Summers, the chairman and vice chairman, respectively, of UCI’s Department of Psychiatry and Human Behavior.

The letters indicate that ethical and legal concerns about these practices were raised months earlier, but that department officials had taken no action. Bunney did not return telephone calls. Summers’ office referred all questions to UCI’s public affairs office.

A medical center spokeswoman declined comment on the allegations except to say that the internal investigation was launched “some time after the first of the year . . . and should be completed in a few months.

“At this point, the only thing I can say is that the internal audit is taking place,” spokeswoman Fran Tardiff said Wednesday. “Because the audit is still ongoing, there are no conclusive findings. So we really can’t say anything more.” She said that she is aware of the letters but declined to comment because she has not seen them.

Christopher Rodriguez, the attorney general’s investigator in charge of the Bureau of Medi-Cal Fraud and Patient Abuse in San Diego, confirmed that his office has launched an inquiry into alleged Medi-Cal fraud and falsification of records at the medical center.

Rodriguez said the inquiry was prompted by two anonymous letters referred to his office in late July and early August. He said the investigation is in its preliminary stages. Details about ongoing investigations are confidential pending a decision on whether charges are warranted, he said.

Knowledgeable sources told The Times that the allegations center on drug research conducted in a research ward of the psychiatric hospital, located at the UCI Medical Center complex in the city of Orange. It was not immediately known how many patients were involved, but sources who asked not to be named for fear of reprisals said the practice began at least a year ago.

The research compounds given to patients allegedly were falsely labeled Haldol, an anti-schizophrenic drug that is approved for use by Medi-Cal, the sources said.

Haldol is a brand name for the drug haloperidol, a major tranquilizer that is used in treatment of psychotic disorders, severe behavior problems in children and in the short-term treatment of hyperactivity in children, according to the Physician’s Desk Reference on prescription drugs.

One employee in the psychiatric unit said that last September, he noticed an unusual drug on a patient’s chart. “It struck me as odd. It was a drug listed as Haldol-R,” rather than the drug he was familiar with, called simply Haldol.

“I asked one of the staff casually what it was and I was told flat-out it wasn’t Haldol,” he said. The worker said he was told Haldol-R was actually a research drug called Zacopride and that “they had changed the name” on the patient’s records. “It was a code.”

Several days later, Summers, director of the inpatient unit, issued a memorandum stating that some drugs were being mislabeled and that this practice was to stop, the worker said. The employee said he did not know if it did stop.

A letter of complaint was written to Summers by Dr. Chen W. (Christopher) Heh, an assistant professor of psychiatry at UCI.

In his letter dated Feb. 2, 1990, Heh wrote: “I am concerned as a junior faculty member about the ethics of our department using MediCal/MediCare funding for research protocols.”

Heh noted that the drugs being used in the research were experimental and had not been approved by the U.S. Food and Drug Administration. He added in the letter that Medi-Cal and the federal Medi-Care program customarily does not reimburse hospitals for the use of these drugs.

If state and federal health officials were to know of the practice, “they would deny payment,” Heh wrote. “I believe this unnecessarily places the university in a highly liable and vulnerable position.”

In his letter, Heh further noted that Summers had condoned the practice in an earlier conversation.

Heh did not return repeated calls seeking comment.

In another letter, UCI psychiatrist Lawrence J. Sporty wrote to Bunney, urging “strong, decisive and immediate action” to investigate allegations that Medi-Cal funds were being used improperly in drug research.

“I remember that I spoke with you by phone about this very matter some weeks ago,” Sporty said in his Feb. 5 letter. “At that time, you told me the issue was going to be resolved. If this attached memo is to be believed, it has not,” Sporty wrote, referring to a letter by Heh on the research-drug matter.

Sporty called for an immediate halt to the practice, a review of all Medi-Cal billing and a return of any funds received improperly. He also urged Bunney to seek “an independent external review of these practices . . . so that we may all rest easy.”

Sporty declined comment on his letter and the issues it raised, saying that he preferred to “work within the university system.” However, an official at the medical school said Sporty has yet to receive an answer to his February memo, or word that any internal probe was to be conducted.

In a third letter, Lawrence J. Drake, then administrator of the department of psychiatry and human behavior, wrote to Bunney of his concerns about allegations of improperly billing Medi-Cal, the mislabeling of drugs, and establishing two sets of patient records, only one of which contained the research information.

“Based on our past discussions with Medi-Cal, I am very concerned that over the last year it appears someone has developed a plan to get around the law,” Drake wrote in his Feb. 21 letter.

Drake noted that he had discussed these issues with Bunney “several months ago” and had suggested that the department chairman form a committee to review the ethics of the research unit. “This was not done!” he wrote.

Drake, who has since been transferred to another department at the Irvine campus, could not be reached for comment.