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AG Nessel Joins $117M Settlement to Resolve Medicaid Fraud Allegations at Psychiatric and Behavioral Health Care Facilities

LANSING – Attorney General Dana Nessel announced today that Michigan is set to receive a share of $117 million after an agreement was reached between numerous other states, territories and the federal government to settle allegations of fraud against Universal Health Services Inc. (UHS) and its subsidiary, which own and manage psychiatric and behavioral health care facilities.

UHS is a for-profit holding company which directly or indirectly owns the assets or stock of facilities that provide psychiatric and behavioral health services to individuals, including beneficiaries of various federal health care programs. Its subsidiary, UHS of Delaware Inc. (UHS of Delaware), provides management services to its parent company and other subsidiaries.

Michigan UHS facilities include Forest View Hospital in Grand Rapids, Havenwyck Hospital in Auburn Hills and Cedar Creek Hospital in St. Johns. The total value of the settlement is $117 million, with Michigan’s share at roughly $2.4 million.

“This agreement settles over a decade of alleged fraudulent activities and compensates Michigan and other states for the financial assistance lost while providing a taxpayer-funded benefit,” Nessel said. “Medicaid is a public benefit and exists to assist those individuals who need help with securing health care. When that system is taken advantage of, it is incumbent upon the Michigan Department of Attorney General and similar offices to intervene on behalf of our residents and taxpayers.”

The settlement resolves allegations that between Jan. 1, 2007, and Dec. 31, 2018, UHS submitted false claims to Medicaid resulting from its: 

  • Admission of Medicaid beneficiaries who were not eligible for inpatient or residential treatment; 
  • Failure to properly discharge beneficiaries who no longer needed inpatient or residential treatment; 
  • Keeping beneficiaries at UHS facilities for improper and excessively long stays;  
  • Failure to provide adequate staffing, training, and/or supervision of staff;
  • Billing for services not rendered;
  • Improper use of physical and chemical restraints and seclusion; and
  • Failure to provide inpatient acute or residential care in accordance with federal and state regulations, including, but not limited to, failure to develop and/or update individualized assessments and treatment plans, failure to provide adequate discharge planning, and failure to provide required individual and group therapy.

This conduct violated both the Federal False Claims Act and the Michigan Medicaid False Claim Act.

This settlement results from 18 whistleblower lawsuits originally filed in federal courts throughout the United States, including the Western District of Michigan and Eastern District of Michigan.

This matter was handled by Attorney General Nessel’s Health Care Fraud Division. The Health Care Fraud Division receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $4,895,964 (nearly $4.9 million) for federal fiscal year 2020. The remaining 25 percent, totaling $1,631,987 (about $1.63 million), is funded by the State of Michigan.

Click here to see a link of the settlement.