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LAWSUIT ALLEGES PATTERN OF FRAUD IN PSYCHIATRIC HOSPITAL BILLINGS; EIGHT INSURERS CHALLENGE NATIONAL HOSPITAL CHAIN'S PRACTICES

LAWSUIT ALLEGES PATTERN OF FRAUD IN PSYCHIATRIC HOSPITAL BILLINGS;
 EIGHT INSURERS CHALLENGE NATIONAL HOSPITAL CHAIN'S PRACTICES
 WASHINGTON, July 30 /PRNewswire/ -- Charging a widespread pattern of health care fraud involving hundreds of millions of dollars in patient claims, eight insurance companies filed suit today against National Medical Enterprises (NME) and its now-merged subsidiary Psychiatric Institutes of America (PIA).
 NME and PIA own, operate and manage the second largest for-profit psychiatric hospital chain in the country through a network of 70 hospitals in 22 states and the District of Columbia.
 The suit charges NME with undertaking a coordinated national scheme to admit thousands of patients to psychiatric hospitals, without regard to psychiatric need, in order to bill insurance companies vast sums. The insurers' attorney, Thomas W. Brunner, of the Washington law firm of Wiley, Rein & Fielding, stated, "The evidence available to us shows that PIA regarded filling its hospital beds as its top priority."
 The lawsuit was brought under the Racketeer Influenced and Corrupt Organizations Act (RICO) and other legal grounds by Travelers Insurance Co., The Prudential Insurance Co. of America, Mutual of Omaha Insurance Co., Massachusetts Mutual Life Insurance Co., Northwestern National Life Insurance Co., Time Insurance Co., Phoenix Home Life Mutual Insurance Co. and United of Omaha Life Insurance Co. The case was filed today in federal court in Washington.
 Brunner stated: "We expect our contentions to be proven at trial. They are based on sworn testimony, NME's own documents and other reliable evidence."
 In the end, Brunner said, consumers as well as insurers shoulder the price of abusive practices such as these. The U.S. General Accounting Office (GAO) estimates that medical fraud and abuse cost the nation as much as 70 billion dollars annually, or 10 percent of the yearly health care bill.
 NME's business practices in the treatment and billing of psychiatric patients have been the subject of two recent investigations by a congressional committee and an arm of the Texas State Senate. The company recently settled a civil suit brought by the state of Texas, pleaded no contest to a separate criminal charge in that state and entered into a consent decree in New Jersey.
 -0- 7/30/92
 /CONTACT: Tom Brunner, 202-429-7225 or, after hours, 301-907-8072; or Tom Queen, 202-429-7072, both of Wiley, Rein & Fielding CO: National Medical Enterprises; Psychiatric Institutes of America ST: District of Columbia IN: INS HEA SU:


TW -- DC010 -- 5111 07/30/92 12:51 EDT
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Publication:PR Newswire
Date:Jul 30, 1992
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