The issue of alleged abuses by private psychiatric hospitals emerged again in Texas this month when the state ordered Charter Medical Corp. to pay $1.5 million and provide free care worth $1.5 million to Medicaid children.
In its settlement with the state, Charter officials denied any wrongdoing. However, state officials said the psychiatric hospital chain has continued paying for patient referrals over the past three years. To prevent that practice, the state asked for and received a permanent injunction against Charter from State District Court in Austin.
The injunction prohibits Atlanta-based Charter from admitting children and adolescents who do not meet the state's minimum admission standards and from paying for referrals. Charter's payment to the state of $1.5 million covers legal and investigative costs in the case.
The attorney general ordered Charter to provide 2,800 days of free care to children and adolescents. Although it didn't put a value on the cost of that care, the 104-hospital chain generates a national average of $527 per patient day. That would amount to $1.5 million in care for 2,800 free days.
By providing free care, Charter is relieving the Texas Medicaid program of those costs, said Ward Tisdale, a spokesman in the attorney general's office.
This is the second time Charter has been penalized for problems in its operations. After a 1992 probe into the psychiatric hospital industry in Texas, the attorney general fined Charter $3.25 million.
However, Tisdale said the state found Charter continuing to violate state law, particularly in the area of illegal remuneration. That law prohibits psychiatric hospitals from paying employee incentives based on patient admissions.
When asked about that practice, Charter spokesman Gary Holmes said, "It is not Charter's practice to pay anyone for referrals." He said Charter agreed to the settlement with the state "to resolve outstanding issues and put it behind us."
The injunction is against Charter's 12 Texas hospitals, but only nine of them remain open. In the past year, Charter has closed its hospitals in Fort Worth, Sugarland and Webster.
When the Fort Worth hospital closed in August, MODERN HEALTHCARE requested documents from the state about its investigations at the hospital in 1995. The documents include numerous complaints about inadequate staffing at the hospital and at an outpatient center in Arlington. After investigating the complaints, the state cited the hospital for staffing deficiencies, incomplete medical records and other problems.
However, Tisdale said such deficiencies were not part of the attorney general's review. Charter officials denied that they closed the hospital because of problems meeting state regulations.