The Healthcare Multinational Profiting off Fraudulent Detentions

In July 2020, US healthcare multinational UHS Delaware reached a $122million settlement with the US federal government as the result of an investigation by the FBI into fraudulent detentions of psychiatric patients for profit. Following the resolution of the investigation and civil settlement, UHS must retain an independent monitor selected by the Office of Inspector General within the US Department of Health and Human Services, who will monitor patient care protections. In addition, an independent review organisation will annually audit UHS’s claims to federal healthcare programmes.

The government claims UHS knowingly submitted false claims to Medicaid for services that were not medically necessary, including improper, excessive lengths of stay borne of failure to properly discharge patients when they were well enough, and the admission of patients whose conditions were not severe enough to warrant that level of care. UHS owns nearly 200 acute care inpatient psychiatric hospitals and residential psychiatric and behavioural treatment facilities in the US, with a front group in the UK in the form of Cygnet healthcare.

Furthermore, UHS stand accused of failing to provide safe, adequate care standards, improperly using physical and chemical restraints and seclusion. In the context of compulsory mental health care, principles of best practice place a high value on care standards that are least restrictive. UHS’s conduct in following practices that were improperly restrictive led to an unjustifiable deprivation of liberty. This occasioned the systematic violation of patients human rights.

The Acting Assistant Attorney General Ethan P. Davis for the Department of Justice’s Civil Division said: “The Department of Justice is committed to protecting patients and taxpayers by ensuring that the treatment provided to federal healthcare beneficiaries is reasonable, necessary, and free from illegal inducements… The Department will continue to be especially vigilant when vulnerable patient populations are involved, like those served by behavioral healthcare providers.”

“Illegal inducements should never play a role in a patient’s decision regarding treatment, especially when a patient is seeking care for addiction and other behavioral health needs,” said Byung J. “BJay” Pak, U.S. Attorney for the Northern District of Georgia. “Our office remains committed to pursuing unlawful arrangements that undermine the integrity of federal healthcare programs.”

The scandal raises questions about the ethics of predatory corporate healthcare, and makes the case that multinationals with a commitment to care for vulnerable patients – entrusted with their health, safety and rights – should be subject to democratic oversight. The dearth of public scrutiny affords multinationals broad latitude in determining which care ethics constitute best practice, leading to a deviation from legitimate standards. Secretive, opaque corporate governance structures lead to cultures of impunity that reward failure and disenfranchise patients who are the victims of organisational dysfunction. It was only because of the courage of whistleblowers that the malpractice was brought to light.

The lure of lucrative profits compelled UHS to behave in ways that abused the very communities it is meant to serve, violating medical ethics. The scandal makes the case that healthcare should be a publically owned good rather than an object of corporate profiteering, that healthcare should be a public not a private asset. Longstanding, outgoing UHS CEO Alan B. Miller realized $348,083,919 in total compensation, and the company boasts annual profits of $10billion. The primacy of the profit motive led to a devalued role for ethics, and the proliferation of standards that violated the public interest.

Far from being an isolated incident of malpractice, the scandal represents an endemic culture of calculated, cynical opportunism in the company, which took advantage of a system that is supposed to serve the public, not business. Federal healthcare beneficiaries expect a service that is reasonable and humane, not to become dehumanised objects of profit. The systematic illegality and corruption of UHS’s operations make it illegitimate and unfit for public service.

Documents pertaining to the criminal investigation into UHS reveal that they – albeit unsuccessfully – attempted to suppress evidence of their misconduct in court, showing them to be uncooperative with the investigation and attempts to realise justice. Cultures of abuse thrive on secrecy, and it’s evident that all throughout the investigation UHS sought to prevent their crimes being made public, in order to protect their power and privileges. They are the actions of a company whose operations are based on cynical calculations of self-interest rather than a principled desire to serve the public good.

UHS CEO Alan B. Miller’s extracurricular interests as a member of the board of directors for the Republican Jewish Coalition raises further questions about the lobbying power of the private healthcare industry in politics. His strong ties to the Republican party suggest he supports policies of deregulation and privatisation, which serve to enrich him and liberate UHS from public oversight. His presence in politics suggests he is using his lobbying power to influence policymakers to pass legislation that is beneficial to UHS’s profit agenda, corrupting the democratic process.

Under his leadership, in 1986, UHS created Universal Health Realty Income Trust, the first REIT in the healthcare industry, mixing healthcare provision with real estate. In April 2014 UHS announced the acquisition of Cygnet healthcare for $335 million, extending its operations into the UK market, where it has generated equal practices of abuse. Cygnet’s franchise model means it has the same mode of business operation as a McDonald’s. In the context of behavioural therapies, which seek to reform patients, this means that patients become a reconstituted product.

Fraud and abuse in the corporate healthcare market is not broad public knowledge, making reform seem like an impossible task. Except for a few media headlines, there is a dearth of sustained investigative reports into the corruption. The scale of the problem suggests nothing short of a public inquiry is necessary, and legislation to subordinate the corporate healthcare market to democratic governance structures.

William M. McSwain, United States Attorney for the Eastern District of Pennsylvania said:

Quality mental health treatment is critical for the patients who place their trust in the hands of service providers… The allegations involved in this matter — inappropriate billing and inadequate care – have no place in our health care system. Behavioral health service entities must have strong mechanisms in place, including appropriate supervision and oversight, to avoid fraud and abuse in order to ensure they provide the level of care that their patients deserve.

Meg Sherman is an independent journalist based in the Great Britain. She is passionate about history, current events, and the intersection of cultures and media narratives. Read other articles by Meg.