Sentencing Finally Completed for $189 Million Medicare Fraud Scheme

Earlier this year, the United States Department of Justice (DOJ) wrapped up sentencing in a $189 million Medicare fraud scam dating back roughly a decade. Bobby Rouse, Steven Houseworth, Jeffery Parsons, and David Edson were all members of the executive team of Continuum Healthcare, which owned mental health centers and Westbury Community Hospital in the Houston area. Each location operated a partial hospitalization program that was supposed to be a treatment program for individuals with mental illness, intended to closely resemble a highly structured, short-term hospital inpatient program. However, while it was a distinct and organized intensive treatment program, it offered less than round-the-clock care.

In 2010, Continuum opened Westbury Community Hospital with two of the community mental health centers, Hornwood and Baytown, becoming outpatient centers and continuing to operate their existing partial hospitalization programs under the Westbury name. Westbury also opened a partial hospitalization program.

Rouse, Houseworth, Parsons, and Edson were responsible for the day-to-day operations of Continuum/Westbury and participated in various illegal kickback programs. One of the kickback programs involved patients that were referred to the facility for treatment in exchange for payment, but the vast majority of the patients did not qualify for partial hospitalization program services because they were not experiencing an cute psychotic episode. Other referred patients did not qualify because they were suffering from mental retardation, dementia, or Alzheimer’s.

The investigation was supposedly launched after a 2011 Houston Chronicle report that looked at Medicare payments to private ambulance companies transporting able-bodied patients to community mental health clinics from personal care homes. Most of those patients were delivered to “partial hospitalization programs,” whose services are paid for by Medicare but not always regulated by states (including Texas).

After an April 2012 seizure of patient records from Westbury Community Hospital, Parsons believed they were “fine,” noting that employees are asked about any ties to personal care homes or other health care providers and must sign paperwork indicating they have no such ties.

The Houston Chronicle investigation noted that Westbury Community Hospital was a frequent stop for private EMS delivering patients from personal care homes. Patients who were interviewed by the paper often were able-bodied and did not understand why the specialized transport was needed. Further, many of the interviewed patients remembered the food they ate and the videos they watched at the clinics, but could not recall therapy.

Continuum billed Medicare roughly $189 million for the fraudulent partial hospitalization program services and Medicaid paid approximately $66 million on those claims.

A total of fourteen individuals were charged and convicted in relation to the scheme. Other individuals involved that owned personal care homes were Aretha Johnson, Deborah Davis, Inger Michelle Pace, James Bobino, Mary Browning, and Cheryl Waller. Also indicted were Houston patient advocates Earnestine Johnson and Ronald Turner.

Rouse was sentenced to ten years in prison, Edson to four years, and Parsons and Houseworth both sentenced to thirty months in prison.

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