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Doctoring the bills 

How Medicare helpd health-care providers get rich at your expense Dr. Jerome Feldman's mental-health center was well-known to local authorities when they arrived at his South Orange Blossom Trail office last June and finally shut it down. The building where he sheltered low-income, mentally ill patients already had been condemned, and parts of it still were. Health inspectors had also objected when, in the absence of a full kitchen at the center, they discovered that patients' meals were being cooked outside on portable stoves. Nothing stopped the Jerome Feldman Community Mental Health Center from operating. Patients subsidized by government aid -- some of them no more than a step from homelessness -- continued to be shuttled in from nighttime homes in assisted living centers, and continued to rely on Feldman and his staff for therapies and shelter. The conditions certainly didn't hurt business; based upon treatments that Dr. Feldman claimed to provide there, Medicare in 1995 and 1996 alone had reimbursed the center more than $2.2 million. When health and code enforcement agents returned with the fire marshal on June 18, they carried a list of 56 fire-code violations. The scene they encountered was more pathetic than alarming: dirty and disheveled, about 30 patients napped, milled about or gazed at their one apparent luxury, a large-screen TV. But the delegation barely had time to confront its nemesis on his way out the door. "He said, 'I'm Dr. Feldman, and I've got to leave," recalls Orlando fire inspector Cathy Condrone. That left his confused staff to deal with the patients, whose daytime home was about to be padlocked for good. "It was sad," says Larraine Hamilton, a code enforcement officer. "They didn't know where to go." â?¢ â?¢ â?¢ â?¢ â?¢ â?¢ Dr. Feldman stands accused of no malfeasance. But his Medicare charges for assisting the poor and mentally ill are enough to make him a target of investigators probing excessive billing for psychiatric services that he said he provided. Those investigators also seem to have sent him packing. After the shutdown of his Orlando center, Dr. Feldman closed another one he operated in Sanford. A third center he essentially controlled in a Daytona Beach suburb is now closed as well, and he has put his six-bedroom Ormond Beach home up for sale. His decline is such that earlier this month he was in U.S. Bankruptcy Court in Orlando fighting over the third center's assets -- most of which have been claimed by the U.S. Department of Health and Human Services. He is not alone in inviting scrutiny. Dr. Feldman is one of several operators in Florida targeted for questionable billing in the area of "partial hospitalization services" reimbursed by Medicare, the federal program that subsidizes health care for the elderly and disabled. "Partial hospitalization services" were designed to complement the rise of local mental health centers that began in the 1960s, when hundreds of thousands of mentally ill people were released from institutions into communities across the country. In 1990, however, a change in Medicare law opened a loophole that allowed nonprofit providers such as Dr. Feldman to claim reimbursements for offering those same services. Yet among the new law's faults was the absence of any oversight authority. That change prompted a gold rush. From 1993 to 1996, the number of centers billing Medicare more than doubled, and the amount paid per patient tripled. (Dr. Feldman himself was reimbursed in 1996 at a rate double the per-patient national average, according to the Health Care Financing Administration.) During that same period, government figures show the total paid to center operators nationally skyrocketed from $60 million to more than $148 million -- and in only the first three quarters of 1996. Like Dr. Feldman, many of the biggest winners operated in Florida, home to 22 of the top 30 centers banking "partial hospitalization" payments. By 1996, reimbursements to mental health centers in Florida -- totalling $112 million -- were almost four times the amount paid out for comparable services in Texas, the No. 2 state. The federal investigation scrutinizing Dr. Feldman and other operators is part of Operation Restore Trust, originally a two-year federal program aimed at rooting out Medicare abuses in Florida and four other states. Now extended and broadened to 12 more states, the program by May 1997 had posted $187 million in fines, recoveries and settlements. Federal officials bragged that Operation Restore Trust had netted 74 criminal convictions; 58 civil suits and 210 criminal cases were pending. "Our office is particularly interested in pursing health-care fraud cases," says Ralph Hopkins, of the U.S. Attorney's Office in Orlando. He declined to comment on Dr. Feldman. But Dewey Price, head of the Miami office directing Operation Restore Trust investigations in Florida, said he had referred work on Feldman for consideration for criminal action. And Anthony Dean, of the state Attorney General's anti-fraud unit in Orlando, said his office was investigating Dr. Feldman and the operators of nine other centers for abuse of Medicaid, a state program that also provides health care for the aged and needy. â?¢ â?¢ â?¢ â?¢ â?¢ â?¢ "What's the worst thing you've heard about me?" Dr. Feldman asks into the phone, ending nearly two months of unreturned calls and thwarted attempts for an interview. In the blunt-yet-guarded comments that follow, he blames his failed ventures mostly on jealous competitors and former associates. But he directs a special venom at federal regulators. "They should call it Operation Shut Down Programs," he says, defending a practice that he insists included five therapeutic groups a day. "Hundreds of patients got service. I got the black eye." A graduate of the medical school at the Free University of Brussels in Belgium, Dr. Feldman has specialized in psychiatry since obtaining his Florida license in 1982. And he sees no hypocrisy in the contrast between his home -- six bedrooms, four-and-a-half baths, pool, boat access to the Tomoka River, all located on a street that winds beneath a canopy of trees and all for sale with an asking price of $298,000 -- and the mental health center on the South Trail that shared its property with an auto-repair business. "Maybe your wife and my wife wouldn't want to live there," he says, "but the patients loved it." He set up shop on the Trail in December 1994 after a deal to open a mental health center with a group of physicians in western Florida fell through. And in the months that followed, Dr. Feldman says he was overrun with referrals and new business. Three months after his opening, the federal Health Care Financing Administration issued a certification and an ID number that entitled the doctor to bill virtually at will for services provided at the Orlando center -- and in fact, let him bill retroactively for any service that he had provided since opening. Recalling that Medicare contested only one of the first 200 charts he submitted for reimbursement, he says, "We had the biggest program in Central Florida. We could not have been doing that if we didn't have something the patients liked." From the beginning, the building owned by Stanley Roberts and Phillip Kobrin of Winter Park caught the eye of city inspectors. Patients would be driven to the office for three to four hours a day. Although licensed as a doctor's office and reimbursed by Medicare for providing psychiatric services, "He was essentially operating a group day care," says Orlando code enforcement officer Jon C. Martin. On Feb. 28, 1996, fire inspectors noted deteriorating walls, alterations made without permits, a kitchen sink that drained into an open trough -- a remnant of the building's previous life as a dairy -- as well as inadequate heating and air-conditioning. A day later, code inspectors posted the condemnation notice. A six-foot chain-link fence was erected while the front section of the building was repaired. The center reopened that May. "The place was packed all the time," Martin says. Monthly inspections continued. "They'd bring people in by the vanload," says Mike Rhodes, chief of the city's Code Enforcement Bureau. "People milled around while they waited for their treatments." But the scrutiny was taking its toll. Perhaps sensing the permanent shutdown of his Orlando office, Dr. Feldman asked that his certification be transferred to a new address in Sanford, where he also had been accepting patients. Indeed, before the Orlando office was closed, a former employee said that schedules were posted there directing the transfer of patients and staff between centers in Orlando, Sanford and Daytona Beach. The new business at 800 W. Lake Mary Blvd. had been known at various times as the Overbridge Center, the Behavioral Network of Seminole County, and A Second Chance In Life. "Now we're calling it the Jerome Feldman Community Mental Health Center," James Pelletier, a therapist who worked for Feldman, said in an August 1996 deposition. But the certification that would have allowed Dr. Feldman to bill from the new address was never transferred; after being told that he would have to submit a full application for HCFA review, he never followed through. While that fact, plus the eventual revocation of the billing number for the Orlando center, should have blocked Dr. Feldman from billing for the patients' care, federal officials say he could have continued to cash in due to Medicare's inept monitoring system. "Is it possible for a provider to relocate? Is it possible for a provider who is sanctioned to continue to receive Medicare benefits? Yes," says Ben St. John, spokesman for the U.S. Department of Health and Human Services Inspector General's Office. How? "It may be a matter of sending them to another one of the facilities," he says. â?¢ â?¢ â?¢ â?¢ â?¢ â?¢ In July, one month after the shutdown of the Orlando center, a visitor to the Sanford address found a few patients sitting inside on benches. A woman seated at a reception desk said that Dr. Feldman was not in. Outside on the steps, the carpet was worn through, and the only sign marking the entrance was an empty metal frame; otherwise, the building seemed in generally good shape, preventing federal officials from using local code violations to chase Dr. Feldman out. Earlier this month, however, he was moving out on his own, loading artificial flower arrangements and wall hangings into a van; inside, the building looked vacant. Dr. Feldman painted a warm portrait of the Sanford center, insisting he offered free care. "It didn't cost the taxpayers anything. It cost me," he says. He retreated from further comment, particularly after being asked why -- if this venture was charitable -- he had attempted to shift his Medicare billing privileges there. It was not his only business in the neighborhood. Located next door is a strip center at 820 W. Lake Mary Blvd. Here, Dr. Feldman rented another office. And although he is no longer a tenant -- the landlord says Dr. Feldman moved out without notice on Oct. 31 -- state records list the second office as the mailing address for Bertje Corp., a Feldman-owned company embroiled in legal action with one of his former business associates, Kathleen Tunnicliff. Tunnicliff had been hired by Dr. Feldman in March 1995 to manage the Orlando center, and was doing so in 1996 when it was first closed by city inspectors. During that temporary shutdown, her boss introduced her to J. Doyle Tumbleson, an attorney who has incorporated several businesses for the doctor. The result was incorporation of A New Under- standing, a mental health treatment center in the Daytona Beach suburb of Holly Hill. Although most of the stock backing A New Understanding was under Tunnicliff's name, Dr. Feldman stated in a deposition that he paid the fees for incorporation, as well as rent, utilities, salaries and expenses that included computers, a television, a satellite dish and a gas grill. He also, according to court documents, paid Tunnicliff a $100,000 salary. In return, she signed a contract with two of Feldman's companies: Bertje was to receive 7 percent of gross profits for billing and claims processing services, while A Second Chance in Life Inc., whose corporate address is Dr. Feldman's home in Ormond Beach, would earn half of the center's gross revenues for providing psychiatrists, therapists and counseling to patients. Thus did Tunnicliff, 27, with a two-year degree and related experience only in billing, become administrator of a mental health treatment center that eventually would receive more than $600,000 in Medicare reimbursements. A New Understanding closed in October -- evicted in proceedings brought by Dr. Feldman's mother-in-law. The current legal action is over the assets of the bankrupt center; Dr. Feldman alleges A Second Chance in Life is owed $336,000, Bertje $48,000. Earlier this month, however, U.S. Bankruptcy Court Judge Karen S. Jenneman delayed action to divide those assets after a motion was filed on behalf of the U.S. Department of Health and Human Services. The new motion alleges that about $200,000 -- the bulk of the center's assets -- represents Medicare reimbursements made after the center "misrepresented costs." Tunnicliff's attorney, Joseph E. Foster, says that patients treated in Orlando were loaded into vans and driven to the Holly Hill center, which he says enabled double billing of Medicare. And from April 1996 to January 1997, Foster says, Dr. Feldman padded cost reports submitted for Medicare reimbursement to offset the costs of supporting his clinics. Under oath, Feldman acknowledged that, while awaiting Medicare approval of Tunnicliff's billing number, he paid A New Understanding's expenses with revenues from his Orlando center. But one of Feldman's attorneys, Martin Boire, says, "Feldman never double-billed for anybody. It did not line Dr. Feldman's pockets." The relationship between Dr. Feldman and Tunnicliff turned sour, according to Foster, after Tunnicliff attended a Medicare seminar in June where a consultant explained to her the illegality of the set-up. After that, she locked her mentor out of the premises and refused further payments to him. Foster alleges that Dr. Feldman had offered clinics to two other female employees as well. And federal investigators say they have linked Dr. Feldman to at least six centers. "It's my opinion the various clinics with which Feldman is associated are all directly or indirectly controlled by him," Foster says. Dr. Feldman dismissed the suggestion. "If it was true, it wouldn't make me a bad person. Would it be bad for me to make a slight profit?" He traces the ongoing inquiries to the betrayal of Tunnicliff, who, he says, received her first Medicare reimbursement check and set out to take over the regional market. "If she's so honest and thinks this is so illegal, why doesn't she return the whole sack of money to Medicare?" he says. Instead, Tunnicliff filed the bankruptcy. "She was tired of the litigation and didn't want to play anymore," says James Foster, a second attorney who is representing Tunnicliff in the matter. Asked why his client hadn't realized the problems sooner, Foster says, "Why would she think the doctor was doing something that was Medicare fraud?" â?¢ â?¢ â?¢ â?¢ â?¢ â?¢ But as no criminal charges or civil actions have been filed against him seeking repayment, was Dr. Feldman simply acting as any entrepreneur would -- by filling a niche and charging what the market would bear? State and federal officials acknowledge their share of the fault for abuses in the system. But in the federal Health Insurance Portability and Accountability Act of 1996, lawmakers created a fraud and abuse data collection system designed to prevent the 600 center owners who billed Medicare about $150 million during the first three quarters of 1996 from exploiting loopholes again. Also adopted was a new requirement that health care providers must use their Social Security numbers -- a crucial piece of information needed to track those who previously could get Medicare certifications under different names. In making the revisions that started the gold rush six years ago, Congress relied on the states to police the providers. "The feds assumed there would be some parallel state requirements. In 30 of the 50 states there weren't," says John Bryant, an assistant secretary of the Florida Department of Children and Families. "We have no regulatory obligation at this point." After shying from action four times this decade, state legislators now are likely to jump on the health-care fraud bandwagon and back requests for regulatory authority. A proposal on the table would establish professional guidelines and patient rights, require state licensing and regulation of the centers, and set minimum dietary, housekeeping, sanitation and fire-safety standards. Armed with these, state officials could have shut Feldman down, at least in Orlando. "You want to build these people into a system of care," Bryant says. "You do not want a bunch of free agents out there billing for services." U.S. Attorney Hopkins acknowledged the obstacles in winning convictions in cases involving Medicare fraud. "These cases are very difficult to prosecute," he says. "Medicare regulations are complex, at times confusing. We have to show the operator intentionally set out to defraud Medicare, and we have to use Medicare regulations to prove that." But no laws or regulations can be designed so adroitly that opportunists are unable to capitalize on an opening. "The system is meant to deal with people who are basically honest," says attorney James Foster. "If you have people who aren't basically honest, the system doesn't work very well."

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