Twin Cities mental health agency to pay $4.5 million in federal fraud case

A once-prominent Twin Cities mental health agency has agreed to pay $4.52 million to settle federal charges that it defrauded Medicaid — a case, advocates say, that highlights a need for greater oversight of Minnesota's large network of in-home counseling services.

Complementary Support Services (CSS) submitted thousands of false medical claims and failed to provide adequate supervision of unlicensed practitioners, according to a settlement announced Tuesday by the U.S. Attorney's Office in Minneapolis.

Prosecutors said CSS falsely claimed that patient medical files were reviewed by licensed professionals acting as clinical supervisors, when in fact the records were illegally "batch signed" by the agency's president, Teri Dimond. "These client files could not have been, and were not, reviewed and supervised as required by law," the U.S. Attorney's Office said in a statement. CSS, which at its peak employed up to 80 mental health practitioners across the state, providing at-home therapy to hundreds of Minnesota children and adults, also illegally billed Medicaid for time spent on paperwork rather than patient care. Under the direction of Dimond, prosecutors said, the agency routinely added an extra billable unit for paperwork time for each client visit, falsely claiming it as "face-to-face" time. The practice resulted in Medicaid being overbilled by thousands of billable units dating back to January 2007, prosecutors said.

The alleged fraud went undetected for most of the past 10 years, and has underscored the need for closer supervision of mental health services provided to clients in their homes, advocates argue. Like more than 400 other agencies that provide mental health services in the home and community, CSS was unlicensed and not subject to routine inspections to assure that submitted bills matched the services provided. To detect fraud at such agencies, the state largely relies on reports or tips from concerned staff and clients. Since January 2007, CSS had submitted more than 85,000 claims for payment to Medicaid, prosecutors said.

"This was a train that ran off the rails years ago, but no one seemed to care," said Katy Gorman, a former clinical supervisor at CSS, in a 2015 interview. "There were absolutely no internal controls. None."

Priscilla Lord, a Minneapolis attorney representing CSS, said the agency has consistently denied the allegations even as it wound down its operations.

"No one has admitted any wrongdoing or proven any wrongdoing in this case," she said. Lord also said CSS helped more than 800 of its patients transition to other mental health agencies across Minnesota.

A Star Tribune report in 2015 found the agency not only misled the government but also put scores of patients in harm's way by circumventing state rules on record-keeping and clinical supervision. Former employees said mental health practitioners at CSS would sometimes fill their progress notes with everyday activities such as "grocery shopping," as if it were therapeutic. One former employee said she was threatened with the loss of pay if she did not falsify treatment records for a child with mental illness, which she called "blackmail."

In addition, rather than personally reviewing progress notes and claims for patient care, Dimond "batch signed" thousands of documents that formed the basis of the agency's claims to Medicaid, according to the settlement.

Many of the agency's clients lived alone in rural areas and relied on visiting CSS practitioners for help with their medications and other services, former employees said.

At such in-home agencies, supervision is vital because the practitioners making home visits are typically unlicensed and lack professional degrees. To bill for services under the state-federal Medicaid program, the agency must have clinical professionals, such as psychologists or licensed social workers, independently review patient files and practitioners' notes to ensure proper care.

Investigators also accused Dimond of transferring $2 million in Medicaid funds from CSS to a nonprofit she started in Wisconsin. The federal government seized the money in June 2016 and will retain $1.75 million of the funds seized, bringing its total recovery to $6.27 million, prosecutors said.

As part of the settlement, CSS will be permanently excluded from contracts with federal and state health care programs. Dimond, who has denied wrongdoing, will be excluded from these programs for at least eight years; and another former CSS executive, Herbert Stockley, will be excluded for at least five. According to the CSS website, the nonprofit agency ceased operations last July.

Chris Serres • 612-673-4308