National Medical Is Seeking Mass Texas Settlement

Embattled hospital chain National Medical Enterprises Inc. is aggressively pursuing settlements in dozens of malpractice lawsuits filed by former patients at its psychiatric hospitals in Texas, sources said Tuesday.

The cases represent a major chunk of the more than 100 civil lawsuits brought by patients who say they were physically mistreated and abused in National Medical facilities. The Texas cases gained nationwide attention two years ago and touched off more than a dozen state and federal investigations into allegations of insurance fraud and mistreatment of patients at psychiatric hospitals operated by National Medical and other for-profit mental hospital chains.

Sources said National Medical is involved in “serious negotiations” aimed at settling most or all of 67 patient cases being handled by the Ft. Worth law firm Andrews & Clarke. Attorney Robert F. Andrews would not confirm or deny the report of negotiations. “We view it as a lawyer’s job to always pursue a settlement,” he said.

Andrews said the patients his firm is representing are seeking total damages of nearly $150 million from National Medical.

Christi Sulzbach, vice president and assistant general counsel of National Medical, confirmed the settlement effort with Andrews & Clarke but said the talks are in the early stages. “I would anticipate that there would be more discussions, but I would not characterize it as being close to a resolution,” she said.

Sulzbach added: “We would like to get all of those issues related to the past era of NME and the psychiatric division behind us. Settling those patient cases would be part of closing out that part.”

The disclosure of the settlement negotiations comes less than a week after hundreds of federal agents raided more than 20 of National Medical’s facilities as part of a broad criminal investigation of the hospital company. Authorities were seeking evidence to support suspicions of improper billing and diagnoses, as well as allegedly illegal payments for patient referrals.

The Texas lawsuits involve activities at the Brookhaven Psychiatric Pavilion near Dallas, the recently closed Psychiatric Institute of Ft. Worth and other facilities in Texas. The suits, which also name as defendants various physicians who attended to patients in the hospitals, claim civil rights violations, false imprisonment, invasion of privacy and fraud.

The Psychiatric Institute of Ft. Worth, a 99-bed chemical dependency and psychiatric hospital, ceased operation Aug. 6. It was one of the National Medical facilities raided by federal agents about three weeks later. The institute gained nationwide attention in 1991 when Duard Bok, a former staff psychiatrist, accused it of illegally paying for patient referrals and of abusing patients. National Medical has denied those charges.

Bok’s allegations, along with widely publicized reports of the forced hospitalization of a San Antonio teen-ager, resulted in public hearings in Texas and in the state’s attorney general filing a lawsuit against National Medical. In June, 1992, Texas settled with National Medical.

In July, National Medical said it was setting aside $65 million to defend itself in lawsuits related to its psychiatric division. The plaintiffs include 19 insurers who have alleged that the company submitted more than $750 million worth of fraudulent billings.