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Mental health clinic sues state, says it will close if Medicaid payments aren’t restored

A Lawrence mental health clinic that treats more than 1,200 poor patients said it will close “imminently’’ if Massachusetts does not restore its Medicaid payments.

Arbour Counseling Services, which is owned by the country’s largest psychiatric company, sued three state officials in federal court Tuesday over the payments, which the state suspended June 6 because of “credible allegations of fraud.’’ The company’s Lawrence clinic is accused of allowing unlicensed and unsupervised therapists to treat patients.

The company argued in the lawsuit, filed in US District Court in Boston, that the state inappropriately suspended the fees, which constitute 80 percent of the clinic’s business. The state did not provide proper “notice, a hearing or other required due process,’’ Mark Pearlstein, a lawyer for the company in Boston, said in a written statement.

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Arbour asked the court to reverse the state’s decision and require it to start paying the Lawrence facility for the care it provides “to a community in need,’’ Pearlstein said.

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Under state regulations, Arbour must keep providing services to Medicaid, or MassHealth, members during the suspension, unless the company terminates its contract with the state, which it apparently has not done. The suspension period appears open-ended.

Arbour, owned by the national Fortune 500 company Universal Health Services, has a troubled history of repeated quality-of-care lapses in Massachusetts, as does its parent company. Universal is also facing fraud investigations in numerous other states.

Cheri Andes, executive director of the National Alliance on Mental Illness Massachusetts, said the organization is concerned about the impact of the situation on patients. Fraud hurts patients, but so does a mental health clinic’s abrupt closing.

“There can been long waits to find mental health providers,’’ Andes said in an e-mail. “This is especially true of psychiatrists and nurse prescribers, and then especially for people with MassHealth.’’

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Suddenly closing the clinic could lead to patients going without medications.

“That’s dangerous – many [psychiatric medications] can cause serious issues when stopped abruptly,’’ she said.

The lawsuit names as defendants Marylou Sudders, the secretary of Health and Human Services; Daniel Tsai, assistant secretary for MassHealth; and Joan Senatore, compliance director for MassHealth.

MassHealth spokeswoman Elissa Snook said in an e-mail that members have access to nine other outpatient behavioral health providers in Lawrence, and at least nine other sites within 30 miles.

“MassHealth members in the Lawrence area will continue to have access to a robust network of outpatient behavioral health services in their community,” she said.

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State officials did not say whether they would help patients find new providers if the Arbour clinic closes.

Medicaid’s action grew out of a whistle-blower lawsuit now in US District Court in Boston. The case was brought against Universal and Arbour Counseling by the parents of 19-year-old Yarushka Rivera, who died in 2009 while under the care of the Lawrence clinic.

Julio Escobar, the girl’s stepfather, and Carmen Correa, her mother, alleged that unlicensed and unsupervised therapists diagnosed Rivera with bipolar disorder, and that a nurse working without adequate supervision prescribed an antiseizure medication sometimes given for mood disorders.

Rivera developed a seizure disorder after she stopped taking the drug and suffered a seizure shortly before she died.

Virtually every therapist who came in contact with Rivera at the Lawrence clinic was unlicensed and unsupervised, her family said.

They alleged that Universal defrauded the government by not following Massachusetts regulations requiring that nurse practitioners prescribe medication only under the supervision of a certified staff psychiatrist — while still charging the government for those services.

The state attorney general’s office joined the lawsuit as a plaintiff a year ago. Medicaid paid the Lawrence clinic $1.5 million last year to treat MassHealth members.

Universal has vigorously defended itself in court. The company argued the case does not belong in court because the issues raised are a matter of compliance with state regulations and not related to federal billing fraud.

In his statement, Pearlstein said that “Arbour Counseling is, and has been, in substantial compliance with the rules and regulations relating to the supervision of health care providers at the facility.’’

Liz Kowalczyk can be reached at lizbeth.kowalczyk@globe.com.