A coalition of community mental-health clinics followed a playbook used by interest groups seeking U.S. government money: They created a trade association, doled out campaign contributions, and hired a former senator and Medicare administrator to lobby in Washington.
The difference in this case is that some members of the association dedicated to fighting Medicare reimbursement cuts were stealing government money at the same time they were trying to keep it flowing, according to prosecutors.
Lawrence Duran, a former board member of the trade group and an owner of Miami-based American Therapeutic Corp., a chain of seven clinics, was sentenced to 50 years in prison last month for orchestrating a $205 million Medicare fraud.
Other unnamed association members “have been indicted or are under investigation,” according to a Sept. 9 Justice Department court filing in the Duran case. Prosecutors announced a Medicare fraud indictment against Biscayne Milieu Health Center Inc. in Miami, also an association member, and its owner two days earlier.
What unfolded in the case shows how Duran, and possibly others involved in fraud, took on the trappings of legitimate political players to gain access to lawmakers and influence national policy.
Duran was a founder of the trade association, the National Association for Behavioral Health, a board member and one of the leading financial contributors, said Patrick Koeth, a Federal Bureau of Investigation agent, at Duran’s sentencing hearing. The group was founded in 2006, according to association documents.
Duran “had a very integral part of the lobbying role,” Koeth testified. “His involvement was to keep pushing those lobbying efforts.”
The trade association isn’t involved in fraud and continues to operate, said Paul Broussard, a board member and an owner of Southwest Ambulatory Behavioral Services Inc. in Crowley, Louisiana. Charges against Duran were a “total shock,” he said.
The association’s president, Robert Miller, the chief executive of MMO Behavioral Health Systems in Baton Rouge, Louisiana, e-mailed a statement from the group saying Medicare fraud shouldn’t be tolerated. “Our members applaud the Department of Justice for uncovering such activity in order to protect the vulnerable individuals who need services the most,” the statement said.
Prosecutors haven’t accused the association, its lobbyists or lawmakers of any wrongdoing.
The association spent at least $620,000 since 2007 to hire leading health-care lobbyists including former Senator John Breaux, a Louisiana Democrat, and Thomas Scully, who headed the Centers for Medicare & Medicaid Services under President George W. Bush, according to Senate records. Scully said he didn’t suspect any wrongdoing and Breaux didn’t return phone calls.
Scully, who was registered as a lobbyist for the group in 2008 and 2009, said he “was skeptical about representing them to begin with and was more so by the day” after an initial meeting. “I wasn’t really sure what they wanted and I wasn’t sure they knew what they wanted,” said Scully, who added that he “never spent one minute working” for the association.
Five other employees of his firm, Alston & Bird LLP, registered as lobbyists and the firm reported $200,000 in total billings. Lindsay McGarity, an outside spokeswoman, said no members of the firm were available to comment.
Melissa Green, a spokeswoman for Breaux’s firm, Patton Boggs LLP in Washington, said nobody was available to comment. Timothy Perrin and Harry Sporidis, lobbyists with Polsinelli Shughart PC in Washington, who have worked for the association, didn’t respond to e-mail and phone messages.
Association members organized fundraisers for Senator Mary Landrieu, a Louisiana Democrat, and former Representative Kendrick Meek, a Florida Democrat, before the criminal investigations into some of its members became public. Both lawmakers co-sponsored legislation advancing the group’s top priorities.
Landrieu knew nothing about wrongdoing by Duran, said Jane Campbell, her chief of staff. Meek, who gave up his House seat last year to run unsuccessfully for the Senate, didn’t return e-mails to the website Politic365, where he is chairman of the editorial board; no phone number is listed for his Florida consulting firm.
Community mental health clinics offer such out-patient mental health services as group therapy and drug abuse counseling, which are supposed to save money by keeping Medicare patients out of hospitals.
To obtain paitents, Duran’s clinics bribed managers at assisted-living facilities and halfway homes and then forged records to make it look as if services were provided, according to prosecutors. Patients were given cigarettes and lunch and were paid $35 to sit in its offices all day, authorities said.
Duran was an active member of the trade association, which at its peak in 2010 had two employees and $378,908 in annual revenue, mostly from membership dues, according to its annual Internal Revenue Service filing. The group’s Louisiana-based executive director, Donna Newchurch, and Washington legislative director, Meredith Dyer, are no longer affiliated with the association and didn’t respond to e-mail or phone messages.
The group, which at one point listed a mailing address five blocks from the White House, had roots in Louisiana, where a similar organization had done state-level advocacy and many of the association’s original 10 to 15 members operated there, said Broussard. The national group attracted clinic owners from Florida, Mississippi and Texas, and eventually grew to include more than 30 members, who paid dues based on their clinics’ revenue, Broussard said.
In exchange, the association promised members access to a lobbyist, meetings with lawmakers during quarterly “fly-ins” and educational forums, according to its website.
A 2010 letter from the association warned about a proposed reduction in Medicare reimbursements and a new requirement that clinics provide at least 40 percent of their services to non-Medicare beneficiaries. It described an association meeting with Medicare officials.
The association boasted on its website that its “aggressive advocacy efforts significantly reduced the severity of the proposed payment cut” after the Medicare agency announced the final rule a few months later. Ellen Griffith, a spokeswoman for the Medicare agency, declined to comment.
Letter From Association
The association claimed credit in a 2008 letter to the Medicare agency for working with Louisiana’s two senators, Republican David Vitter and Landrieu, “to develop and introduce” legislation to keep payments from decreasing that year. The measure didn’t advance in Congress.
The association also backed 2009 legislation by Vitter that would have allowed clinics to bill patients’ nutritional planning, meals and transportation costs to Medicare. That measure also failed. Luke Bolar, a Vitter spokesman, didn’t respond to requests for information about the association’s role in the legislation.
Prosecutors submitted to the court a YouTube video in which Duran and two others said they were about to meet with Representative Ileana Ros-Lehtinen, a Florida Republican who was a sponsor of similar legislation in the House.
“She’s a huge advocate for mental health services, so that’s the reason why we’re here to see her,” Duran said in the video. Alex Cruz, a spokesman for Ros-Lehtinen, didn’t respond to requests for comment.
Association members organized a 2009 fundraiser for Meek, who also co-sponsored the House bill, during his unsuccessful Senate campaign. The association asked attendees to donate at least $300 per person, according to court records.
Between 2007 and 2011, association board members and others who disclosed an affiliation with their clinics donated to 16 candidates, according to Federal Election Commission data compiled by the Center for Responsive Politics, a nonpartisan group that tracks political contributions. Those donations included $7,800 to Landrieu and $7,300 to Meek, as well as $1,500 to Vitter and $10,700 to former Senator Blanche Lincoln, an Arkansas Democrat who lost her 2010 re-election bid.
Duran gave $1,500 to Lincoln in February 2010, eight months before he was arrested on charges that his clinics defrauded Medicare for eight years. Marianella Valera, who co-owned the clinics with Duran and also pleaded guilty in the fraud scheme, gave Lincoln $1,500 in February 2010 and $2,400 to Meek in October 2009. Lincoln didn’t respond to a phone message or e-mail.
Duran resigned from the group in 2009, the association statement said. Prosecutors submitted to the court copies of e-mails Duran exchanged with association members and staff in 2010 related to group business.
The federal judge in Duran’s case, James Lawrence King, rejected the government’s argument that Duran’s role in the trade group should be a factor in his sentence. Duran’s lawyer, Lawrence Metsch of the Metsch Law Firm, PA in Aventura, Florida, noted the judge’s position and declined to comment further.
In the indictment involving the other association member, Biscayne Milieu, the person identified in government court papers as its chief executive officer and owner, Antonio Macli, pleaded not guilty in federal court in Miami. Rene Sotorrio, the Coconut Gove, Florida lawyer representing Macli, declined to comment.
The association has shrunk. It now has about a dozen members and no full-time staff, Broussard said. Uncertainty caused by the Medicare agency’s proposed rules rather than any allegations of wrongdoing by members explain why the group is “in limbo,” he said.