MONTPELIER, Vt. (AP) — The Vermont attorney general's office is conducting a criminal investigation into the Brattleboro Retreat following a whistleblower's complaints about alleged Medicaid fraud at the private psychiatric hospital, The Associated Press has learned.
Attorney General William Sorrell acknowledged that his office was investigating, and his comments coupled with documents provided to the AP in response to public records requests show the probe has gone beyond the concerns first raised by former hospital employee Thomas Joseph.
"The investigation we are conducting is not narrow in scope," Sorrell said in an interview last week.
The Brattleboro Retreat, founded in 1834, is a major player in Vermont's mental health and addiction recovery system, with more than 3,500 inpatient admissions last year, and slightly more served in outpatient programs. Its 2014 annual report said about a quarter of its $65 million annual budget came from state Medicaid programs.
Joseph alleged a yearslong pattern of instances in which, if overcharges showed up in patient accounts, Retreat staff would not make refunds but instead would change the account to reflect a balance of zero.
Confirmation of the state probe — which has involved the office of Doug Hoffer, Vermont auditor of accounts, and the program integrity unit of the Department of Vermont Health Access — comes two years after Joseph was rebuffed when he took his concerns to the office of former U.S. Attorney Tristram Coffin.
And it comes a year after U.S. District Judge William Sessions III rejected a lawsuit in which Joseph, seeking to recover for the government and for himself, cited 32 patient billing records that he said evidenced $11 million in fraud.
"We learned late last week that the Attorney General was investigating the Brattleboro Retreat," retreat spokesman Jeff Kelliher said in an email Monday. "However, he did not provide any further detail regarding the scope of the investigation, except to say that his office would be contacting our attorneys in due course. We take this matter very seriously."
Despite the earlier reversals, Joseph, whose job at the Retreat was collecting from patients with balances not covered by insurance, has continued to push, including taking his concerns to Hoffer.
Hoffer said in interviews he thought there were two other state agencies better equipped than his to conduct a Medicaid fraud investigation. He said he asked a certified public accountant on his staff, Hugh Pritchard, to review the materials Joseph supplied and see whether they warranted forwarding to the program integrity office at the Department of Vermont Health Access or the attorney general's Medicaid fraud unit.
Emails obtained by the AP under Vermont's Public Records Act show that on May 1, Pritchard wrote to Steve Monde, an assistant attorney general with the Medicaid Fraud Unit, that "I have not been through the entire set of documents that Thomas Joseph supplied, but I did see some specific instances that seemed to me to warrant investigation."
The AP made two requests to Hoffer for records relating to Joseph's allegations, on July 16 and Aug. 10. Hoffer provided 45 documents in response to the first request. He denied the second, in an Aug. 14 letter he said was drafted by Sorrell's office.
The Aug. 14 letter provided the first indication that records relating to the Joseph allegations were tied to a criminal investigation. The denial cited the Public Records Act exemption for "records dealing with the detection and investigation of crime."
Sorrell said Friday, "The records you requested are relevant to a criminal investigation that relates to the Brattleboro Retreat." He would not provide details.
But Sorrell was not the only state official indicating the probe goes beyond Joseph's allegations.
Notes that Pritchard took on phone calls to other state officials, part of the response to the July 16 records request, reflect one conversation he had with Monde of the Medicaid fraud unit.
"Steve (Monde) acknowledges that the scheme alleged by Joseph is a plausible mechanism for a health care provider fraud," Pritchard wrote. But the "materials received from Thomas Joseph contain no proof of any specific instance of his allegations. (The Medicaid fraud unit) is looking into the Retreat but not specifically at Joseph's allegations."
Others were more willing to credit Joseph. A July 31 email, obtained separately from the public records requests but authenticated by Hoffer, was written by an investigator with the program integrity unit of the Department of Vermont Health Access. It said, "I can now confirm that the information sent by Mr. Joseph has some validity to it."
Joseph filed his federal lawsuit in 2013, at a time when the Retreat was playing a key role as a linchpin of the state's mental health system, having agreed to take patients from the former Waterbury State Hospital after that facility was flooded and forced to close by 2011's Tropical Storm Irene.
Without the Retreat, the state's mental health crisis "would have been a complete and utter nightmare," Patrick Flood, who was mental health commissioner at the time, said in a recent interview. "They absolutely saved our bacon."
Pritchard wrote in March that he had reviewed the Retreat's financial statements for 2011 through 2013, which showed negative cash balances "of a few hundred thousand dollars at December 2011 and 2012, and of almost two million dollars at December 2013."
He added that his initial review "suggests that all three elements of the 'fraud triangle' were in place: financial pressures forcing the Retreat to choose which of its obligations to meet; an opportunity to acquire funds by writing off credit balances; and a conjectural rationalization — that if payers do not request refunds then they do not want or deserve them."
Another document, obtained separately by the AP and authenticated by Hoffer and another senior official, showed that as the Department of Vermont Health Access began questioning the Retreat about various patient accounts, a lawyer for the Retreat acknowledged a "mistake" in one patient's account and refunded more than $1,700 to the state Department of Mental Health. Joseph maintains there are many more cases like that one.