The Department of Justice is investigating five hospitals run by the largest private provider of mental health services in Massachusetts for possible billing fraud, according to a report filed recently with the Securities and Exchange Commission.
The hospitals are part of Arbour Health System, which is owned by Pennsylvania-based Universal Health Services, the largest owner of psychiatric hospitals and clinics in the country. Over the past three years, the Justice Department’s civil and criminal divisions gradually have expanded their investigations into the company’s facilities across the country.
Until now, the only Massachusetts hospital known to be under scrutiny was Arbour-HRI in Brookline. But in the SEC report submitted by Universal, the company revealed that the government’s investigation has grown to cover all of its Massachusetts hospitals, including Arbour Hospital in Jamaica Plain, Arbour-Fuller Hospital in South Attleboro, Pembroke Hospital, and Westwood Lodge. The five hospitals have about 550 beds total and account for more than 20 percent of psychiatric admissions in the state. Arbour also owns outpatient counseling clinics in the state.
The Justice Department informed the Fortune 500 company of the expanded investigation in December, saying it involves “billings submitted to government payers in relation to services provided at those facilities,” according to the company.
When asked for more details, Arbour spokeswoman Judith Merel declined to comment. The Justice Department would not provide more information.
Last April, during a Bank of America Merrill Lynch Health Care Conference, Universal’s chief financial officer, Steve Filton, said the company does not “know exactly what the government’s full concerns are.” But he said generally “if there is a claim that you’re billing inappropriately, it’s either because the patient doesn’t belong in the hospital or because while they’re in the hospital, the argument would be they’re not receiving an appropriate level of treatment,” according to a transcript of his remarks.
Filton said Universal executives “certainly don’t necessarily agree” that either case applies to their hospitals.
According to the recent financial filing, more than 25 of the company’s 213 inpatient psychiatric hospitals are under investigation by the federal government.
In Massachusetts, Arbour has been cited repeatedly by state regulators over poor care and inadequate staffing at its hospitals and outpatient clinics. At Arbour-HRI two years ago, public health officials found the hospital failed to provide active treatment to some patients, whose diagnoses included bipolar disorder and paranoid schizophrenia. Instead of attending group therapy, inspectors said, patients spent many hours sleeping or wandering the hallways — an allegation the company disputed.
This spring, the US Supreme Court plans to review a case brought by the parents of a deceased Massachusetts teenager against Universal Health Services. Yarushka Rivera died soon after receiving care at an Arbour clinic in Lawrence. Her parents contend that the company defrauded government insurance programs by charging for services provided by therapists unqualified to care for their daughter, who was covered by Medicaid.
Attorneys general have worked with the Justice Department to investigate Universal in other states. Emalie Gainey, a spokeswoman for Attorney General Maura Healey, said she could not confirm or deny a Massachusetts state investigation into Arbour.
Healey, however, submitted a brief to the US Supreme Court on Thursday in support of the Rivera case, in which she said the company committed “serious fraud against the Commonwealth that may have led to significant patient harm.”
The Service Employees International Union, the nation’s largest health care union with 1.1 million workers, requested in November 2013 that Universal form an independent committee to address patient safety, quality, and compliance at its facilities. Universal declined, said Ryan Pfeffer, SEIU research coordinator.
“A lot of Massachusetts taxpayers’ money is flowing through these troubled facilities and headed to Pennsylvania as profits, which raises huge questions about why [Universal] can’t seem to get the problems under control,” he said.
During a company call with analysts last April, one caller asked about the effect of the investigations on the business. Filton said executives “have cooperated fully with the government and have responded to all their requests.”
He indicated he did not know when the investigations would resolve. “This certainly has been long already. But I also do not believe that it is necessarily in its end stages.”
Liz Kowalczyk can be reached at email@example.com. Follow her on Twitter @GlobeLizK.