Psychiatric Treatment Facility Pays $150,000 to Settle Whistleblower Medicaid Fraud Suit

Waters & Kraus Represents Key Relator in Southwood Psychiatric Hospital, Inc. Medicaid Fraud Case

DALLAS – May 26, 2009 – A psychiatrist contracted by the state of Pennsylvania to monitor private facilities for fraud and abuse blew the whistle on Southwood Psychiatric Hospital, Inc., a private psychiatric hospital for children and adolescents. Now that hospital will comply with monitoring programs and take other measures in order to settle allegations brought under the False Claims Act that Southwood over-medicated and abused the children and adolescents who had been sent there by the Department of Public Welfare, and then charged Medicaid for this substandard care.

Dr. Stefan Kruszewski filed suit after the state initially ignored his warnings and dismissed his efforts to “right some wrongs in the system.” He was represented by the law firms of Waters & Kraus and Fish & Richardson.

“Here is a company that profited from the Medicaid program while ignoring the needs and care of the most vulnerable of patients entrusted to them by the State,” commented WK partner Charles Siegel. Although the settlement, negotiated by the Department of Justice, does not include any admission of wrongdoing, “the settlement agreement does require the defendants to institute various compliance and monitoring programs. These are obviously good things for the children of Pennsylvania,” Mr. Siegel continued. “We applaud Dr. Kruszewski for his persistence and courage to come forward and expose this wrongdoing. It was a privilege to be part of this case.”

Based on the assertions of Dr. Kruszewski, Southwood Psychiatric Hospital, Inc. and its parent company, Youth and Family Centered Services, Inc., agreed not only to change their policies and conduct, but also to pay $150,000 to the Medicaid program to settle the fraud allegations. The agreement comes after a two-part, four-year investigation that began in 2001. The U.S. Department of Justice announced the settlement May 21, 2009.

About Waters & Kraus, LLP

Waters & Kraus is a nationally recognized plaintiffs’ firm with a special focus on handling complex cases. Since its inception, Waters & Kraus has been dedicated to representing individuals against corporations that cause harm and defraud taxpayers. We are dedicated to protecting our clients’ rights and fighting for justice. With offices in Texas, California, and Maryland, Waters & Kraus has successfully litigated cased in jurisdictions across the United States on behalf of individuals from all 50 states, as well as foreign governments.

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