No criminal activity was found after a two-year federal probe of Louisiana's Medicaid program at psychiatric hospitals and other healthcare businesses, U.S. Attorney L.J. Hymel said.
"We have not obtained information that could result in indictable offenses at this point," Hymel said last week.
Although violations of Medicaid rules may have taken place, that does not mean criminal conduct occurred, Hymel said.
The state attorney general's office has prosecuted more than 40 people for Medicaid fraud since 1995.
A federal grand jury ordered the state Department of Health and Hospitals to turn over records on 29 people and companies involved in the Medicaid program.
The grand jury subpoena requested payroll records and an array of other documents relating to former DHH Secretary Christopher Pilley, who headed the agency from 1991 to 1993. The subpoena also demanded records pertaining to companies that treated Medicaid patients in psychiatric hospitals.
One of the facilities named was Caring, a private psychiatric hospital for juveniles located in Plaquemine.
Former Lt. Gov. Bobby Freeman and his late brother, James Freeman, M.D., and James Gum Jr., a former state health official, opened Caring in 1992. They also ran another psychiatric hospital for Medicaid patients in Catahoula Parish.
Caring attorney Karl Koch recently said no one ever contacted him about the federal criminal investigation.
"It never involved us," he said. "My client, Caring, was never subpoenaed, was never talked to, was never looked at, as far as I know."
The three owners of Caring paid themselves $30,000 to $50,000 per month for serving as hospital directors, according to a 1995 report by the Advocate of Baton Rouge.
Caring made a profit of $9.6 million on its $17 million in revenues in 1993, according to documents filed in a lawsuit involving Caring in federal court.
In a state inspection in 1994, DHH officials found 84 of the 114 patients at Caring did not have a diagnosis justifying hospitalization. But the hospital's owners insisted Caring's staff provided appropriate care and had done nothing wrong.
Bobby Freeman and Gum recently agreed to settle all their disputes with DHH by repaying the agency about $7.7 million.
Since January 1996, DHH has received no subpoenas regarding the Medicaid program, DHH spokesman Rusty Jabour said.