Psychiatrist Concerned Over Policies Named as Whistle-Blower Who Set Off Investigation

A psychiatrist who has long voiced concern about billing practices at the Behavioral Health Department has been named by sources as the man who blew the whistle to the federal government on the billing scheme.

The sources told The Times that the man who brought to light the scandal that could cost county taxpayers $15.3 million is Dr. Jerome “Jerry” Lance. Lance, a county psychiatrist since 1990 treating indigent mentally ill people, stands to receive up to $2.5 million as a reward for alerting federal authorities, the sources say.

Questioned Thursday, Lance first called his attorney, then refused to confirm or deny his involvement in the eight-month probe by the U.S. attorney’s office. He noted the case is under federal seal.

But in a lengthy interview earlier this week, Lance said improper billing practices had been going on for nearly a decade. He fiercely defended the small group of county psychiatrists who provided incriminating evidence that precipitated the worst financial debacle in recent county history.

Lance stands to receive a substantial sum under the federal whistle-blower statutes.

In an interview Wednesday, Lance said the doctors’ actions had nothing to do with money and everything to do with patient care.

“It was a righteous effort to correct the [problems] in the mental health department,” Lance, 64, said at his office Wednesday.

“There was a structural defect. Someone put the beam in backwards.”

Lance and other psychiatrists say they believe their authority began to erode after Randy Feltman was put in charge of the mental health department in 1989. Feltman preferred a “social model” over a “medical model.” Social workers, rather than psychiatrists, often led management teams that serve mentally ill clients.

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Emphasizing the importance of breakthrough medication in treating the seriously mentally ill, Lance and the other psychiatrists wanted doctors to take a leadership role.

Feltman’s billing practices further stripped doctors of power, Lance said. Under that system, doctors’ names and federal provider numbers were used on Medicare claims for services actually provided by social workers, psychologists and nurses.

The significance is that a doctor’s name on an insurance form allows for a higher Medicare reimbursement rate.

Feltman contends that this billing procedure was legal. But a Medicare insurance claim form provided by Lance stated a doctor’s name can be used only if the services “were medically indicated” and “personally furnished by a physician or an employee under a physician’s personal direction.”

Lance called the social model system the “demedicalization” of treatment for the mentally ill.

“The system was basically run by social workers,” said Lance, who was a faculty psychiatrist at UCLA for 18 years before coming to Ventura. “At the time, the [authority of the] medical director was extremely weak.” That director was Pierre Durand, who has since become Health Care Agency director, who now oversees the mental health department.

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Psychiatrists discovered the billing practice in May 1998, Lance said. That was a month after the county merged its mental health and social services departments to create a 1,400-employee Human Services Agency.

“We found out by accident” that social workers were using doctors’ names, Lance said. “A clinician told a psychiatrist, ‘We need your U-PIN [provider] number for our Medicare billing.’ And the psychiatrist said, ‘What’s a U-PIN number?’ When we found out, we discovered a whole, new world.”

Doctors vehemently opposed the superagency, fearing a further erosion of their authority. In December, supervisors reversed the merger after federal health care officials said the consolidation violated Medicare billing rules.

The failed merger sparked several federal and state audits, including the U.S. attorney’s probe, which alleged illegal billing practices at the county’s Behavioral Health Department dating to 1990.

Over the past few months, the county has been working to correct problems within the mental health system uncovered by the merger. David Gudeman, a psychiatrist, in June replaced Stephen Kaplan, a social worker, as director of the mental health department. Gudeman has since formed a Medicare Implementation Committee to make sure the county complies with Medicare rules.

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Lance was appointed chairman of that committee, which is made up of seven psychiatrists, psychologists, administrators, social workers and nurses.

Committee member Duane Essex, a psychologist, said the county is now complying with federal regulations.

A major portion of that effort is requiring psychiatrists to supervise the multidisciplinary management teams and ensuring that the billing is handled properly.

“This is about treating people who are brain damaged,” Lance said. “This is about bringing back a medical necessity. There is a problem and we’re fixing it.”

Times staff writer Catherine Saillant contributed to this report.