HOT SPRINGS -- Arkansas Department of Human Services Director John Selig said two companies that are suspended from the state's Medicaid program because of a federal bribery investigation have told patients they will continue to treat them for free.
Selig told legislators at a committee hearing Tuesday that he didn't know many details about the offer of free service from Trinity Behavioral Health Care and Maxus Inc., both owned by businessman Ted Suhl. The companies were suspended from receiving new Medicaid claims earlier this month after a former Human Services Department deputy director pleaded guilty to accepting bribes in exchange for inside information that benefited the two companies.
"I understand that the provider has contacted the clients and said, 'We will continue to serve you for free,'" Selig told legislators. "So the clients can decide whether to leave or not, but the state will not be providing any payments to that provider, and it's a party we paid about $25 million to last year."
Suhl has denied any wrongdoing. He has also asked that his facilities be allowed to continue providing mental health services -- and receive Medicaid payments -- while the investigation is ongoing. Trinity in Warm Springs provides inpatient treatment for about 90 children. Maxus, which does business under the name Arkansas Counseling Associates, serves about 2,500 adults and children who receive outpatient care.
Legislators were briefed on the investigation into Suhl's companies as well as continued monitoring of state juvenile facilities by Disabilities Rights Arkansas. The nonprofit has sent monitors into five additional juvenile treatment centers, an expansion of an earlier investigation into the Arkansas Juvenile Assessment and Treatment Center near Alexander that uncovered allegations of guards rewarding youths for carrying out assaults.
Both topics were raised during the joint meeting of the Senate Children and Youth Committee and the House Aging, Children and Youth, Legislative and Military Affairs Committee. The meeting took place in Hot Springs during the Arkansas Juvenile Justice Conference put on by the state Division of Youth Services.
During their testimony, Selig and Medicaid Inspector General Jay Shue both said they were limited in what they could tell the legislators about the bribery investigation.
Rep. David Meeks, D-Conway, asked whether there was any protection for those patients who opted for the free services so that the companies did not try to later collect fees from them if the companies are permanently excluded from Medicaid as part of the investigation. Selig said there isn't much protection that could prohibit the companies from sending a bill, but there could be protection prohibiting them from trying to collect the funds.
Selig said the department has had "some concerns" with the companies in the past, but the Medicaid suspension is based on the ongoing bribery investigation.
"They can continue to serve these kids. This issue has to do with the fraud due to the bribery. We have had some concerns with these providers in the past ... but this was not a quality of care issue per se that we cut them off for," Selig said. "I can't stand here today and say these kids weren't getting reasonable care."
The department suspended the companies from being paid for new Medicaid claims earlier this month after former agency Deputy Director Steven Jones pleaded guilty in federal court to accepting bribes in exchange for providing inside information.
In court papers, prosecutors said Jones aided two mental health companies by accepting cash, meals and other items of value from their owner -- a man federal authorities referred to in court papers as "Person C."
Jones, who served as a deputy director of the Human Services Department from 2007 through 2013, pleaded guilty Oct. 2 to charges of conspiracy and bribery concerning programs that receive federal funds.
As part of his plea, Jones admitted to receiving at least $10,000 in cash bribes or other things of value, some of which were funneled through a West Memphis church.
After Jones' plea became public, the Human Services Department released a statement saying it had identified Suhl as "Person C." The agency also issued two letters of suspension to the companies, citing Jones' plea as a "credible allegation of fraud."
The companies are allowed to continue billing Medicaid for services they provide to patients through Nov. 5, Selig said.
Suhl has appealed the decision, which will be heard by an administrative law judge at the Arkansas Department of Health. A hearing date had not been set as of Tuesday afternoon.
Selig said the agency had reviewed the cases of about 50 Medicaid beneficiaries at the inpatient center once the determination on the Medicaid suspension was made and the department started helping families with the transition.
"Our contractor went out and has worked with those families and children to make sure they got a placement if in fact they wanted to move," Selig said. "One of the things we found in the first 50 or so we looked at is about a third of them just went home, which to me raised the question of did they really need to be there. Now maybe they just got better in the time they were there, and were ready to go home."
In an interview late Tuesday, Suhl's attorney Michael Scotti took issue with Selig's statement.
"Each one of those kids were there because they were reviewed by an independent medical doctor and there was a clear need for those children to receive treatment," Scotti said. "Many of the children who went home did so against medical advice. The DHS agent that called the children's homes threatened the families with financial insecurity based on the government withdrawing Medicaid payments."
Selig referred the investigation to the Medicaid Inspector General and the Arkansas attorney general's Medicaid fraud unit.
Legislators asked Shue whether the investigation would lead to any changes in how the state does business or reviews contracts.
Shue, who said he is personally investigating the allegations, said his agency would likely talk to Selig and come before the Legislature during the 2015 session to propose some improvements to "checks and balances" within the Medicaid program.
"Obviously we always look at how we want to improve the system," he said. "The [amount of fraud we're finding] is not blowing us away, but there's more we can do and look at."
Suhl's attorney has said that the suspension will likely put the two companies out of business and result in more than 500 employees losing their jobs because the companies rely almost exclusively on Medicaid payments for income.
According to Human Services Department records, Trinity received about $11 million per year in Medicaid payments during the past five years. Maxus received between $12 million and $18 million per year dating back to 2009.
The testimony concerning Suhl's companies came during a nearly two-hour hearing in which Debbie Poulin, the legal director of Disability Rights Arkansas, told legislators that the nonprofit's staff expanded monitoring to the other juvenile treatment facilities in late September and early October.
Monitors are in the process of reviewing residential juvenile treatment centers in Colt and Harrisburg, which are operated by contractor Consolidated Youth Services.
The group is also monitoring the Lewisville Juvenile Treatment Center, the Dermott Juvenile Treatment Center and the Dermott Juvenile Correctional Facility, which are operated by South Arkansas Youth Services.
In an interview late Tuesday, Tom Masseau, executive director of Disability Rights Arkansas, said that the two contractors have fully cooperated with the rights group, which has legal authority to enter and monitor facilities that house people with disabilities to ensure that their rights are being protected.
Masseau said the monitors are looking closely at educational services and medical care as well as the overall treatment of youths housed in the facility and how it compares with the Arkansas Juvenile Assessment and Treatment Center near Alexander.
The group began monitoring the Alexander lockup, which houses about 100 of the state's most violent and behaviorally troubled youth, after a spike in assaults at the facility became public in June.
In August, the group released an interim report of their findings including that multiple youths had reported that staff members at the lockup rewarded youths with candy bars for assaulting other children. The report also questioned whether some youths were staying too long at the facility.
In response to the report, G4S Youth Services,the contractor that operates the facility and the Youth Services Division have made several changes to their policies and procedures at the facility.
Masseau said the group plans to release a detailed report about its findings concerning the Alexander lockup and the other facilities next month.
Metro on 10/29/2014