Cuckoo's nest: a well-intentioned provision in the Senate's health legislation may exacerbate the abuses in America's mental-health industry.

JOHN David Deaton was a normal 17-year-old when he walked into a National Medical Enterprises (NME) psychiatric hospital in Dallas. A physician had persuaded him to go there for help with depression after his girlfriend jilted him. Deaton did not know that the physician was on the hospital's payroll, and that his pay depended on how well he did at filling the hospital's beds.

A doctor who did not see Deaton until months later ordered him admitted to the hospital. After four days, when Deaton sought to leave, he was tied down with leather restraints. He was diagnosed as having "borderline personality disorder," a catchall label psychiatrists can pin on a lot of people who don't fit more specific diagnostic categories. And after Deaton thought out loud about killing himself or the nurse who first had him tied down, the shrinks added "homicidal and suicidal ideation" for good measure. In fact, however, the most abnormal thing about John Deaton was that his father's employer provided extraordinarily rich insurance coverage for mental illness.

Altogether, 22 psychiatrists signed Deaton's charts to keep him restrained, and he was held for more than a year, including 333 days tied to a wheelchair or spreadeagled on a bed with leather restraints. He was required to use a bedpan and never allowed more than one arm free to take his meals.

It was only when Deaton's insurance coverage ran out that he was allowed out of his restraints. His muscles had atrophied so badly he could not walk. So the hospital tied him to a gurney and moved him by ambulance to a state hospital. The doctors there released his restraints immediately, but it took ninety days to nurse him back to health before he could be freed. "I was held in bondage for insurance money," Deaton told a congressional hearing in 1994. "Health-care fraud cost my insurance company around $250,000. It cost me over a year of my life."

Now, thanks to a recent U.S. Senate vote, we may all become more vulnerable to this kind of psychiatric buccaneering, if not as "patients," then as people who will have to pay higher insurance premiums to cover "therapy" for a host of illnesses, many of them imagined or bogus.

For the senators, this was one of those "feel good" votes that give benefits to some vocal, organized interest group at the expense of voters who will never know their pockets are being picked. The senators amended the Kennedy - Kassebaum health-care bill to require insurance companies and employers who provide health-care coverage to pay for treatment of mental illness on the same basis as they pay for treatment of ailments such as diabetes, heart disease, and cancer.

The critical vote was 65 to 33, and debate lasted just forty minutes. Sen. Alan Simpson (R., Wyo.) told about a niece who had killed herself. Sen. Paul Wellstone (D., Minn.) described visiting his brother in a psychiatric ward. Sen. Pete Domenici (R., N.M.), who co-sponsored the amendment with Wellstone, did not have to mention -- because most of the senators knew about it -- his daughter's battle with mental illness.

CURRENTLY, almost all companies with employee health benefits offer some coverage for mental illness, but 89 per cent set lower limits on what they will pay for such treatment than for treatment of physical ailments, according to the Congressional Budget Office (CBO). The Senate action would "impose direct costs of $11.6 billion" on employer-insured workers, averaging $110 each. Who will pay for it? Most likely the workers themselves, in the form of lower wages or cuts in other benefits, says CBO Director June E. O'Neill.

Typically, employers and insurance companies now set yearly limits of 20 outpatient visits and 30 days' hospitalization for mental illness, whereas for other illnesses hospitalization and physician visits are unlimited. Patients pay only 20 per cent for outpatient services for other illnesses, but 50 per cent for mental illnesses. Lifetime payments for mental illnesses typically are limited to $50,000, compared to $1 million for other ailments.

There is good reason for those limits. "Mental illness" is a vague concept, and so is "therapy." And the Senate's legislation does nothing to eliminate that vagueness.

For broken hips, strep throats, diabetes, or gallstones, diagnosis is reasonably standardized and verifiable by objective laboratory tests, X-rays, sonograms, and such. Not so in psychiatry, where diagnoses are much more subjective and debatable. Likewise with treatment, which in the case of mental illness may range from "talk therapies" to electroshock, from drugs to straitjackets. The American Psychiatric Association's Diagnostic and Statistical Manual has gone through five major revisions in forty years. And ailments such as "generalized anxiety disorder," "depression," and "adolescent antisocial behavior" can be suggested, induced, or faked.

Moreover, psychiatrists have attached diagnostic labels to problems that once, in a less mobile America, were handled by grandparents, aunts, uncles, or clergy. Under the rubric of "mental illness," the doctors have medicalized, monetized, and socialized the ordinary emotional bumps and bruises of life.

Already, federal and state fraud investigators have uncovered shocking mental-health scams. In Georgia, psychiatrist James E. McLendon in a single year billed the state for $6.6 million for Medicaid patients. On average he billed for 488 hours of therapy per week, though there are only 168 hours in a week. In New Jersey, Dr. Carl Lichtman submitted hundreds of claims to private insurers for therapy programs that never took place. Once he got paid, he kicked back as much as 25 per cent of his loot to the "patients," who included 56 teachers, a school psychologist and 3 school administrators, and 150 others. Insurance-company officials said Dr. Lichtman billed for as many as 50 hours in a single day. He pleaded guilty and faces up to six years in prison.

And as the Deaton case shows, the danger from the Senate's do-good attempt is not only to our pocketbooks. It could turn into a Frankenstein's monster that would needlessly lock many Americans up in psychiatric wards.

Indeed, it happened just that way in the 1980s. The mental-health special-interest groups pressured several state legislatures and Congress into requiring or providing coverage for mental illness. The result was a boom in the building of psychiatric hospitals. Anxious parents and their adolescent offspring were favored beneficiary/victims.

As Joe Sharkey observes in his book, Bedlam: Greed, Profiteering, and Fraud in a Mental Health System Gone Crazy: "The frenzy to find kids with insurance and put them in psychiatric hospitals had become so overheated that one California school official likened it to Invasion of the Body Snatchers. A 1990 federal review of 500 psychiatric in-patient cases, most involving adolescents and children, found two-thirds were unnecessary hospitalizations."

Sharkey tells how, on April 12, 1991, two burly security guards handcuffed 14-year-old Jeramy Harrell and dragged him in tears away from his grandparents' suburban San Antonio home. The guards were acting on orders from a National Medical Enterprises physician, who was relying on another patient's unfounded say-so that Jeramy had a "drug-abuse problem." Jeramy was locked in a psychiatric ward for five days. Not until the fourth day was a drug test administered; it was negative. The hospital billed Uncle Sam under his grandfather's military-retiree health insurance: $12,000. Meanwhile, his frantic grandparents had turned to State Sen. Frank Tejeda (now in Congress), who got a court order freeing Jeramy. The psychiatrist turned out to have faked his credentials, and ultimately went to prison for five months. NME eventually paid $300,000 to settle the Harrell family's lawsuit.

Jeramy's experience touched off a Texas Senate investigation --and one of the worst scandals in American medical history. Jeramy's grandmother testified that the ordeal reminded her of her childhood in Nazi Germany. Texas newspapers raised a hue and cry. Scores of victims of abuse in psychiatric hospitals testified. Shocked state senators found a cornucopia of horrors. Social workers, school counselors, probation officers, crisis-hotline workers, even ministers -- "people we have all been taught to trust, not to avoid" -- served as "headhunters" and were paid "bounties" for referring people who then were cajoled or dragooned into admitting themselves to psychiatric hospitals.

These patients received "massive doses of medicine," said State Sen. Mike Moncrief, who chaired the investigation. "If the patient wasn't mentally ill before his therapy, he certainly would be after it."

One Texas teenager's insurer was charged $1,045 in a single day for 21 sessions of "counseling," "group therapy," and "dance therapy." Her father protested: "My daughter was hospitalized for psychiatric care, not training for the Bolshoi Ballet."

National Medical Enterprises was the major offender in these cases. It was a $4-billion company that operated a nationwide chain of 77 psychiatric hospitals. In August 1993 six hundred FBI and other federal agents raided NME headquarters in Santa Monica, Calif., and NME hospitals in seven states, hauling out cartons of records. On the New York Stock Exchange NME's stock fell from $26 to $7. The directors threw out the founders, who were running the company, and new management paid more than $600 million -- about three years' worth of profits -- in criminal fines and reparations to the federal and state governments, 19 insurance companies, and nearly a hundred patients, including John Deaton.

Peter Alexis, an NME regional vice president, was convicted of conspiracy. He admitted he had paid more than $40 million in bribes to more than fifty physicians (including some of the psychiatrists who imprisoned John Deaton) for helping to keep his hospital beds filled. U.S. Attorney Paul E. Coggins in Dallas has convicted several psychiatrists and psychologists and has a task force pursuing dozens of additional cases. Convicted physicians have been required to surrender their licenses as part of their plea bargains.

WHILE the abuses are huge, so, at the core, is the problem of mental illness. No one who has seen the ravages of obsessive-compulsive disorder or schizophrenia, or lost by suicide a young friend suffering clinical depression or its weirder version, bipolar manic depression, would deny it. Relatively inexpensive pharmacological treatment can cure or immensely relieve these conditions in a majority of patients. And more effective drugs, which entail fewer harmful side effects, arrive regularly from the laboratories.

But the U.S. Senate has been slow to recognize the need for safeguards against malingerers and greedy physicians who exploit the various health-insurance programs. Not a single U.S. Senate staffer called the office of Texas Senator Moncrief, which has the most experience of any legislative office in the nation in such matters, to find out about the more than two dozen legislative and regulatory safeguards the massive Texas investigation generated. For example, Texas passed a "patient bill of rights" requiring hospitals to post prominently information about their ownership, rights in voluntary and involuntary commitments, and names of people whom patients can contact if they have problems. Marketing and admissions practices of mental treatment facilities are regulated, and so are referral services.

In Congress representatives and senators will meet any day now to hammer out the differences between the health-care bills passed by the two houses; the senators seem prepared to slow down a bit. It would be a good idea for the legislators to shelve the Senate's mental-health parity provision, while someone calls the Texas legislature to explore the scandals uncovered and safeguards developed there.