U.S. Fraud Case Against County May Be Settled

A Ventura County official confirmed Thursday that the U.S. attorney’s office has tentatively agreed to settle its Medicare fraud case against the county for $15.3 million.

Assistant U.S. Atty. Wendy Weiss accepted the county’s offer three weeks ago, said Supervisor John K. Flynn. Although Weiss and the county’s attorneys have a verbal pact, the settlement won’t be final until documents are filed in federal court in about two weeks, Flynn said.

County officials favor the deal because it brings them one step closer to ending the most ominous of three pending federal and state reviews of the county’s beleaguered mental health department, the supervisor said.

“If it can bring closure, I will be happy,” he said. “It’s a lot of money, but it’s manageable. We can handle it. We have to handle it.”

Weiss did not return a telephone call seeking comment. But county officials have said the U.S. attorney’s office initially requested $17 million to settle claims that the county’s mental health department has fraudulently overbilled Medicare for nearly a decade. However, the prosecutor agreed to accept a $15.3-million counteroffer approved by county supervisors, Flynn said.

Lawyers for the county are still negotiating with the U.S. Health Care Financing Administration to settle a related issue involving licensing of the county’s mental health and medical clinics. It is unclear whether the county will be required to make additional repayments as a result of that review, officials said.

Regarding another investigation, a state official confirmed earlier this week that the California attorney general’s office looked into the possibility that the county also filed fraudulent Medi-Cal claims and concluded that no violations occurred.

Under the terms of the U.S. attorney’s settlement offer, the county will be allowed to pay back the money over three years. That will lessen the blow to the county’s $25-million reserve fund, said Treasurer Harold S. Pittman.

“We’ve split this from one gigantic bite into three bites. That’s good news,” Pittman said. “It won’t be as catastrophic for this year and we can build up better reserves over a three-year period.”

The proposed settlement includes $10 million owed the U.S. government to repay fraudulent billings dating to the early 1990s. The rest is interest accrued on that amount, officials said.

Psychiatrists told federal investigators last year that social workers, nurses and psychologists were using doctors’ names and billing numbers to charge Medicare for services--even if the doctor never had contact with the patient. That violates Medicare regulations, which require that a physician be directly involved in every treatment decision.

The psychiatrists contacted federal officials after the Board of Supervisors voted in April 1998 to merge the county’s mental health and social service agencies. Physicians opposed the merger, believing it would usher in a “social model” of mental health treatment that would dilute a doctor’s ability to make medical decisions.

The board rescinded the merger eight months later after it became clear federal officials believed it violated Medicare billing rules.

Former mental health Director Randy Feltman has argued that the rules for Medi-Cal billings are looser and that the mental health department mistakenly applied the more lax regulations to federal Medicare claims.

Feltman has said he was unaware that the billing practices were illegal. Feltman left the mental health department in 1995 and now runs the county’s welfare-to-work program.

The overbilling continued under Feltman’s successor, Stephen G. Kaplan, who was ousted earlier this year for his role in the merger.

County chief executive Lin Koester last month ordered the mental health department to immediately take steps to correct any improper billing procedures.