COLUMN ONE : Diet Clinic Tactics Draw Fire : Patients were told of glamorous stays, court papers say, but they were sent to psychiatric facilities. Insurers claim records were falsified to obtain payment. A Place for Us owner denies the charges.

Michael quickly realized that A Place for Us wasn’t the place for him.

Overweight and suffering from stress, the New Yorker had flown cross-country to attend what was advertised as a weight-loss clinic in sunny Southern California. The air fare was free and the treatment, he was told, fully covered by his Blue Cross plan.

But when Michael reached Los Angeles, he was shocked to find himself booked into a psychiatric hospital in a run-down section of Bellflower where he was diagnosed as suffering from psychotic depression and bulimia--conditions he denies ever having.

Then he was told he could not leave.

Michael’s is one of many stories emerging from federal and state lawsuits in Los Angeles in which insurers accuse A Place for Us of enlisting doctors and hospital staff to falsify diagnoses and medical records in order to obtain payment for treatment that--whatever its value to patients--was not covered by their health plans.

A Place for Us, the insurers contend in their lawsuits, was at heart a chain of “fat farms” that masqueraded as psychiatric centers because most health plans do not cover weight-reduction therapy. During its peak years from 1989 to 1991, they estimate, the Orlando, Fla.-based program generated $100 million in billings.

The program, which also is the focus of a federal grand jury investigation in Los Angeles, attracted several thousand patients through nationwide ads on television and in magazines such as People and TV Guide. The campaign was backed up by a telemarketing sales force and a toll-free phone line.

Marketing blurbs played up the glamour of the clinic sites here and in Nevada and Florida.

“Visit the Queen Mary or take in a tour of one of Hollywood’s famous movie studios,” one brochure invited prospective patients, amid photos of the Beverly Center and a bistro at Venice Beach.

For most patients, A Place for Us was a free ride, insurers contend. Air tickets, a limousine from the airport to the clinic, four weeks of treatment, outings to Disneyland, Universal Studios and the beach--all were included in a therapy regimen whose average cost to insurance companies was $30,000 to $40,000.

The grand jury probe has resulted in a guilty plea to felony fraud charges by a psychiatrist who admitted falsifying patient records to trigger insurance payments.

The psychiatrist, Dr. Barry Alan Smolev, is said to be cooperating with investigators while awaiting sentencing. He declined to be interviewed.

The program’s owner, Janet Greeson, author of popular self-help books, is the main focus of the federal criminal investigation and insurers’ lawsuits. She says she is the innocent object of a Blue Cross vendetta that has crippled her business, saddling her with personal losses of more than $1 million in the last year.

Worse than the financial losses, Greeson said, the legal turmoil has kept her from fulfilling her dream of opening nonprofit counseling clinics in cooperation with the Vatican and Mother Teresa.

In an interview, Greeson brandished a list of nearly 100 former patients of A Place for Us who she said would testify in her behalf. Indeed, several patients telephoned at random from the list warmly praised Greeson and the program.

She has countersued the Blue Cross affiliates, charging that they have tried to ruin her by rejecting her clients’ legitimate claims.

Under pressure from insurers, A Place for Us has largely folded up. Greeson operated a similar program until September at a Houston hospital under the name Janet Greeson’s Your Life Matters, the third name that Greeson had used for her clinics in four years.

A Place for Us hit the “radar screen” at Blue Cross of California in April, 1991, when an unsigned letter reached in-house fraud investigator David R. Ignatius.

The letter, entered into court records, charged that A Place for Us patients at Van Nuys Community Hospital were being admitted with diagnoses of severe mental illness--most commonly, “major depression” or “psychotic depression”--but the vast majority were really there for eating disorders.

The informant described walking in on a meeting where Smolev, the psychiatrist, instructed staff members in falsifying medical records to support insurance claims.

Staff members were cautioned against documenting improvement in a patient’s condition, the informant said, “so that insurance companies would justify coverage for the entire four weeks of the program.” (Many health plans have 28-day annual limits on inpatient care.)

Ignatius obtained a computer printout of claims submitted to Blue Cross by the three Los Angeles hospitals then hosting A Place for Us: Van Nuys Community Hospital, Los Angeles Doctors Hospital and Bellflower Doctors Hospital.

(A fourth clinic opened later at Suncrest Community Hospital of Orange County. Outside California, A Place for Us operated at Womens Hospital in Las Vegas, St. Rose Dominican Hospital in Henderson, Nev., AMI Medical Center in Orlando, and Peninsula Medical Center in Ormond Beach, Fla.)

Ignatius discovered that a vast majority of the claims submitted by the three hospitals were for “major depression” treatment and that virtually all of the patients were from out of state and were insured by Blue Cross and Blue Shield affiliates in their home states, according to his court declaration.

The hospitals submitted claims to the insurers and paid Greeson’s program a flat fee for each patient. This had the effect of concealing Greeson’s role, according to one insurer’s legal complaint.

For example, weekend forays to recreation or shopping centers were billed as “life skills therapy.” Twelve-step workshops were charted as “cognitive therapy” and aerobics classes as “physical therapy,” the complaint added.

The clinics also routinely waived the 20% co-payment that many patients were required to pay under their insurance plans, according to the complaint. That had the dual effect of making patients more likely to sign up for the program and reducing their financial incentive to alert insurers to any irregularities, the complaint said.

When Blue Cross of California shared Ignatius’ findings with affiliated plans in other states, they began closely scrutinizing claims generated by A Place for Us, causing payment to screech to a halt.

The denial of claims prompted the three Los Angeles hospitals to file for arbitration with Blue Cross. That dispute blossomed into three lawsuits, which have generated more than 30 volumes of records in federal and state courts.

Greeson, the hospitals and the Blue Cross plans are on the brink of a settlement whose terms will be cloaked by a confidentiality agreement, Blue Cross lawyer William E. Von Behren said last week.

But even as that case heads toward conclusion, insurance giant Aetna Life Insurance Co. has just filed its own massive federal lawsuit against Greeson and the hospital companies, making virtually identical allegations.

Among the records that surfaced in the Blue Cross case and that have been incorporated in Aetna’s complaint are internal memos written by staff members at Los Angeles Doctors Hospital, suggesting how to resubmit claims that insurers had sent back to the clinic for more documentation.

Said one memo: “This case is very weak in terms of medical necessity. Pt (patient) had no prior tx (treatment). She denied ever having suicidal thoughts. . . . Recommendation: Send records in order to speed up billing process. Most GM (General Motors, the patient’s employer) contracts have been paying approximately 80% even when no days are cert (certified, or approved in advance by the health plan).”

Said another: “All the records requested would be appropriate to send except nurses notes, due to 2 references to limousine, 1 reference to OA (Overeaters Anonymous) meeting & 1 reference to working on the steps.”

All of the hospitals initially maintained that they were unaware of any falsification of records and that they believed all treatment was appropriate.

However, Asklepios Hospital Corp., parent of Los Angeles Doctors and Bellflower, broke with the other defendants and reached a separate settlement with the Blue Cross affiliates late last year. Asklepios also filed a counterclaim against Greeson, repeating many of the Blue Cross allegations.

William Bluestein, former program director at A Place for Us at Los Angeles Doctors Hospital and Van Nuys Community Hospital, said in interviews that when the Los Angeles clinics were starting up in 1989 and 1990, most patients had genuine psychological problems that led to overeating.

“Since the insurance companies wouldn’t treat obesity, we had to use the fiction,” Bluestein said. “It was the insurance companies’ fault. Everybody felt that way in the beginning.”

In weekly meetings, A Place for Us staff members were instructed--sometimes by Greeson herself--how to fill out patients’ charts or other records to be sure of getting reimbursement, Bluestein said in a court declaration. “Nobody was told to lie, but we were told to emphasize certain things,” he added in an interview.

But as Greeson’s marketing machinery moved into high gear, fueled by the national ad blitz, the clinics saw an influx of patients “who were 20 pounds overweight or who just wanted to get away,” Bluestein said.

Psychiatrist Mark J. Mills, a former Massachusetts mental health commissioner whom Blue Cross consulted as an expert witness, said in a court declaration that psychiatric hospitalization should be avoided unless a patient is acutely suicidal, is psychotic, has unremitting severe depression or has repeatedly failed to improve under outpatient treatment.

A Place for Us patients whose records Mills reviewed “did not demonstrate any of these severe symptoms that would have required extensive inpatient hospitalization,” he said.

Mills was also critical of the clinics’ practice of admitting patients without an initial interview by a psychiatrist.

Another former program director, Terry Shapiro, said that patients were cleared for admission through conversations with telemarketers on the toll-free line. A psychiatrist often would not see them until a day or two after they checked into the clinic, he said in a sworn declaration.

Shapiro also said as many as half of the 200 patients who arrived at the Van Nuys unit during his tenure complained about being admitted to a psychiatric hospital.

Many said that telemarketers at Greeson’s headquarters had described the facility as a “health spa” or “hacienda,” Shapiro said.

When Michael arrived at Bellflower, he was alarmed to find himself in a mental hospital and feared that a psychiatric admission would hurt his career, he said in court statements.

Admission documents listed his diagnosis as “depression psychosis/severe” and bulimia, both of which were false, he said.

After a few days at the Bellflower facility, Michael said he demanded to go home.

“I was informed by the staff member that my return airline tickets to New York were locked in the safe and that if I left before the end of my full scheduled admission that I might be responsible for paying out of my own pocket the remaining days’ balance,” he said.

Michael eventually got his ticket and was allowed to go home early.

Patients anticipating the glitz of Beverly Hills might have found it jarring to be deposited--especially by limousine--at Bellflower Doctors Hospital.

The main building--a two-story box with a gray stone facade--is arguably the handsomest structure on a dreary stretch of Artesia Boulevard occupied by body shops, storefront insurance offices, the crumbling Midtowne trailer park and Willie’s Detail Shop (“Give Willie Your Auto but Give Jesus Your Soul,” the sign advises).

Belen Garcia, who hails from the Central Valley town of Reedley, said many of her fellow patients at Bellflower complained about the facility and initially asked to be sent home. Most eventually were talked into staying, she said, but a few were allowed to go.

Garcia discovered that she was practically the only Californian at Bellflower during her stay. She recalled in an interview that A Place for Us staffers had strongly urged her to fly to Florida to attend the program. But never having been on an airplane and fearful of traveling so far from home, she had insisted on staying in California.

Most patients attended A Place for Us clinics in other states, which made it more difficult for their home-state health plans to discover problems with the program, Blue Cross said. Frank L. Ettin, an attorney for Blue Cross of California, explained that when dealing with out-of-state patients, hospitals bill the local Blue Cross or Blue Shield affiliate and the affiliate seeks reimbursement from the patient’s home-state plan.

Because it can count on such reimbursement with no questions asked, Ettin said, the local Blue Cross plan might not pay as close attention to out-of-state claims as it would to those of its own patients. Ettin acknowledged that this is a weakness that Blue Cross is trying to rectify.

Patients have said in court declarations that their clinic bills sometimes listed treatment they never received or that the time spent with psychiatrists and other therapists was exaggerated. Group discussions, for example, might appear as individual sessions.

During her stay, Garcia said, the Bellflower facility was overcrowded, the program was disorganized and the days were full of boredom, broken up by occasional trips to the beach or to theme parks and by regular visits to 12-step programs such as Alcoholics Anonymous and Overeaters Anonymous.

Although she did not have a drinking problem, she said, she learned to be assertive in such meetings and was able to draw some lessons from them. In that way, she said, A Place for Us benefited her.

However, the trips to the 12-step meetings were not always closely supervised, investigators say. Blue Cross investigator Bob Casey recalled his surveillance of a vanload of patients being transported from A Place for Us in Las Vegas to an Overeaters Anonymous meeting.

As other patients filed into the building for the overeaters session, “these two ladies just hooked on down the street and went into Burger King and had it their way,” Casey said.

At Bellflower, where patients were put on a low-fat, sugar-free diet, Garcia said she lost 11 pounds, but gained it back afterward.

Janet Greeson twice visited the Bellflower unit during her stay, Garcia said. Clinic employees asked the patients not to raise complaints during Greeson’s visits, and most patients adhered to the request.

Garcia, who is 5 feet 4 and 200 pounds, said she was surprised by Greeson’s appearance: “I expected her to be thinner. She’s my size.”

Greeson, who calls herself a recovering food addict, said she weighs 190 and is comfortable with her size.

In an interview at her headquarters, a modest suite of offices in a one-story commercial building, Greeson said that during the years when she vacillated between crash diets and binges, she hit 350 pounds. After developing her own techniques to address problems she realized were psychologically based, Greeson said, she shed more than 150 pounds and has kept it off for 17 years.

Greeson, 50, described her metamorphosis in her hit book, “It’s Not What You’re Eating, It’s What’s Eating You,” a 28-day plan to heal hidden food addiction.

Despite modest expectations from publisher Pocket Books (the initial 1990 printing, in paperback, was 10,000 copies), Greeson’s book has become a stunning success in the self-help genre, with more than 250,000 copies in print and a new hardcover edition.

The book--like its recently published sequel, “Food for Love: Healing the Food, Sex, Love & Intimacy Relationship”--reflects Greeson’s view that eating disorders arise from deep-seated psychological problems, often caused by trauma associated with childhood sexual abuse. She has said that as many as three-quarters of A Place for Us patients were, like Greeson, victims of incest or other sexual abuse.

Overcoming her compulsion has given Greeson serenity in dealing with other challenges, she said, but serenity does not equal passivity.

Greeson, in interviews, defended her programs combatively.

“That’s bull----!” she said several times, dismissing allegations by patients and former employees such as Bluestein and Shapiro.

Bluestein turned against her after she disciplined him for sexually harassing patients, Greeson said. Bluestein said later that there was no basis for the allegation and that he quit the clinic over ethical concerns.

To the basic accusation that A Place for Us used false medical diagnoses to obtain insurance payments, she said: “It’s a lie. How can I get all these psychiatrists to lie about a diagnosis? I have that much power? Nobody’s going to put their credentials and license on the line for me.”

Greeson said she is unaware of where the federal criminal probe stands. Other than a January, 1992, interview that the FBI scheduled with her and then canceled, “I haven’t heard a word,” she said in a recent interview.

Greeson, who uses the title of “doctor,” holds a Ph.D. in clinical psychology from Columbia Pacific University, an unaccredited correspondence school in San Rafael. For several years, she ran addiction counseling centers as a civilian employee of the Navy before establishing her treatment clinics beginning in 1986.

In a court declaration, Greeson referred to Michael, the New Yorker who said he was surprised to be in a psychiatric hospital.

“The only explanation which I have for the statement . . . that he did not know his diagnosis,” she said, “is that one of the symptoms of depression is difficulty in concentrating, or that the patient was engaging in denial.”

Greeson said that she has lost more than $1 million because of the legal actions against her.

She acknowledged that the program made money in its peak years but added: “Everything I ever made I put into this company.”

According to real estate records, Greeson owns homes and income property in Orlando, Las Vegas and Los Angeles, including two condos in a luxury high-rise on Doheny Drive in West Hollywood.

However, those properties are heavily mortgaged, Greeson said.

“I’m basically broke,” she said. “My liabilities exceed my assets.”

As to the future, Greeson said she will continue to market her books, as well as self-produced audio- and videotapes.

She has no more hospital relationships but conducts seminars and outpatient therapy. “It’s better than nothing,” Greeson said.

Hospitals tell her they are being driven out of the inpatient psychiatric business by the insurers’ pressure for cost containment. “You can’t get patients admitted anymore,” Greeson said.