Baltimore Behavioral Health CEO Kris Hathaway (Hairston,Kim, Baltimore…)
State health regulators disclosed Thursday that they have fined Baltimore Behavioral Health Inc. $90,000 for employing a psychiatrist who had been convicted several years earlier of Medicaid fraud.
The fine equals the salary and benefits that the nonprofit clinic paid Dr. Roman Ostrovsky during the 14 months he worked there as an administrator. State officials said BBH should never have hired him because he was on a federal no-hire list because of his fraud conviction.
The penalty comes amid questions about the finances at the West Pratt Street mental health clinic, which was the subject of a recent Baltimore Sun investigation.
Over the past six months, the nonprofit center has laid off staff and met with city officials to discuss concerns about their finances. And two former BBH employees provided The Sun documentation showing that nine months' worth of retirement savings deducted from their paychecks by BBH last year has not been deposited in their accounts.
Chief Executive William "Kris" Hathaway said Thursday that he could not comment on the state's fine because he had not received the decision. Last month he said BBH had taken steps to comply with Medicaid employment requirements and enacted measures to ensure that it would remain in compliance.
BBH has 30 days to appeal the fine.
Hathaway has also said that issues with the company's retirement plan would be resolved by the middle of this month. He acknowledged meeting with city officials to discuss BBH's finances but emphasized that his clinic has never asked the city for financial aid.
The rationale for the state fine is laid out in a report released yesterday and signed by Thomas V. Russell, the state health department's inspector general.
Health providers like BBH that receive Medicaid payments are barred from employing anyone on the federal government's "exclusions" list of people who have defrauded Medicaid, which is jointly funded by the state and federal governments.
"Who you hire, and the background check, is an exceptionally important element of operating as a health care provider under Medicaid," health department spokesman David Paulson said.
BBH hired Ostrovsky in June 2009 despite Ostrovsky's presence on the federal exclusions list. He landed there because of his 2006 conviction for Medicaid fraud totaling $200,000 and the subsequent revocation of his state medical license in 2007. BBH dismissed him in late August.
Baltimore Behavioral Health was the subject of a Baltimore Sun investigation that revealed high Medicaid billings at the clinic. As billings to Medicaid rose in recent years, so did the salaries of top BBH executives, reaching $1.4 million last year for Hathaway and five family members on the company's board of directors.
According to the investigation, some former BBH patients and employees and outside doctors say the clinic has been diagnosing mental illness — and collecting public funds to treat it — in some patients whose main affliction is drug addiction.
The Sun also found that BBH offers many patients a bed in unregulated rental homes. More than a dozen former patients and staff described illicit drug use by patients at some of the houses and BBH facilities.
As of last summer, BBH was treating about 800 patients, making it one of the area's largest providers of drug treatment. But the state's efforts to rein in high-cost Medicaid billings have cut into BBH's revenue. It received $11 million in public funds in fiscal 2010, down from $17 million the year before.
In July BBH had 137 staff members, down from 268 in the fall of 2008. There have been multiple rounds of layoffs over the past year.
In late July, BBH representatives requested a meeting with City Solicitor George Nilson at City Hall to discuss financial concerns. "They didn't make a direct request, but there were concerns with regard to their lender situation," Nilson recalled Thursday. "And they wanted the city to be aware there was this issue pending."
Nilson recalled BBH officials saying that "the city would presumably have a concern about it because if worse comes to worst, [city officials] would have to deal with our population" of addicts in treatment for mental illness. BBH never asked for financial help from the city, he said, nor was any given.
In response to questions from The Sun, Hathaway has said BBH was "not seeking any funds." He declined to elaborate on what he described in an e-mail only as "the transactions for which City Hall was contacted."
Last month, two former employees separately contacted The Sun about concerns with their 403(b) retirement plans, which are the nonprofit equivalent of 401(k) plans.
For months, both women directed BBH to transfer money from their paychecks into their retirement plans, but they say only a small fraction of that money has reached their retirement plans since October last year — claims supported by documents.