'Fraud' lawsuit against Retreat dismissed


BRATTLEBORO -- A federal judge has dismissed a lawsuit that claimed the Brattleboro Retreat defrauded the United States government of nearly $11 million between 2005 and 2012.

Thomas Joseph, a former employee of the Retreat, claimed his "investigation" of the organization's finances revealed discrepancies he believed proved his contention. Throughout the 30-page dismissal notice, Judge William Sessions puts investigation inside quote marks, and notes many of Joseph's examples are inferences that do not provide a basis for his assertions.

Joseph's complaint does not cite a single identifiable record or billing submission claimed to be false, nor gives a single example of when a false claim was presented for payment, noted Sessions.

"(Joseph) provides no facts to indicate that anyone at the Retreat knew about allegedly unlawful retained government funds," he wrote.

According to Joseph, the Retreat regularly overbills government payers, which results in a credit balance owed. The Retreat then uses an accounting code to enter "an amount calculated to offset the credit balance owed ... (resulting) in the patient ledger erroneously showing a zero balance when in reality, a credit remains due and payable to the government ..."

Joseph alleged that the Retreat deliberately falsified records to hide the overpayments and that it used the accounting code to conceal its actions.

According to court documents, Joseph discovered this alleged discrepancy in 2011 while reviewing commercial insurance credits.

"(Joseph) then inferred that this lack of due diligence in the commercial insurance context indicated the Retreat had an active policy of overpayment retention that extended to government programs," stated the documents. "He thus began 'investigating' whether overpayment credits involving Medicare, Medicaid and other government health care benefit programs were being treated similarly."

Following the initial filing of Joseph's complaint in April 2013, the federal government initiated an investigation into his claims but declined to become a party to his lawsuit. Nor did the federal government file its own complaint against the Retreat.

Through its attorneys, Downs Rachlin Martin, the Retreat asked the U.S. District Court for the District of Vermont to dismiss the complaint. Many of Joseph's claims are barred under the statute of limitations outlined in the False Claims Act, contended the Retreat's attorneys. In addition, Joseph failed to state a claim of relief, they wrote.

According to court documents, Joseph identified overpayments to 32 patient accounts, but nine of them occurred more than six years ago.

"Because they fall outside the statute of limitations, they cannot form the basis of (Joseph's) complaint and they are dismissed," wrote Sessions, adding Joseph's argument attempting to waive the statute of limitations is "out of context and is wholly a misstatement of the district court's holding ..."

To satisfy the standard to allow Joseph's complaint, noted Sessions, requires him to specify the fraudulent actions, identify the fraudulent actor, state where the activity occurred and explain why the actions were fraudulent.

"Even if this incident was not outside the statute of limitations, it would not support (Joseph's) theory because (he) does not explain why this was a false claim."

In addition, noted Sessions, certain allegations in Joseph's complaint fail to identify any specific instances of fraud, "instead speculating about overpayment based on different billing codes ..."

Joseph's contention that the Retreat's quarterly and annual balance reports were inaccurate "does not cite any specific balance reports or any specific inaccuracies contained therein ..." wrote Sessions.

One allegation "is somewhat nonsensical," he wrote, "as it seems to argue that the Retreat should have known about the overpayment a year before it was received."

According to an official statement from the Retreat, "We are pleased with the outcome of the judge's decision and feel that it speaks for itself. The Brattleboro Retreat is committed to providing the best in patient care and to working in full collaboration with state and federal agencies."

While Sessions dismissed Joseph's complaint, he did allow 30 days for Joseph to amend his complaint with the specifics he noted were missing.

Bob Audette can be reached at raudette@reformer.com, or at 802-254-2311, ext. 160. Follow Bob on Twitter @audette.reformer.


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