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Psychiatric Fraud

Greed is, of course, what motivates the fraudulent – a category of criminal that has been no stranger to the ranks of psychiatry. According to investigations by CCHR, the mental health system is riddled with them.

In 1992 a hearing before the US House of Representatives Select Committee on Children, Youth and Families heard numerous cases of such abuse provided to the committee by CCHR and others. These incidents ranged from adolescents and children subjected to psychiatric practices they never needed in the first place, to institutions that hired “bounty hunters” to kidnap patients they could hold against their will – all for the insurance money.

Insurance has, in fact, been a major area of psychiatric fraud, particularly among private, for-profit hospitals. CCHR’s investigations which began in 1990 resulted in growing media exposure of fraud and patient abuse in these hospitals, and by 1991 the front pages of national newspapers were covering the stories of patients, mainly teenagers, being locked up against their will until their insurance benefits ran out. CCHR’s persistent exposure of the abuses resulted in investigations not only by state lawmakers, but by insurance fraud investigators, state Attorneys General, the US Department of Justice, the FBI, the US Postal Inspection Service and other federal agencies. One US hospital chain had to pay nearly $1 billion in fines to the federal government and settlements to insurance companies. It subsequently left the psychiatric hospital business.

Other for-profit psychiatric hospital chains came under close scrutiny for their practices, such as paying “headhunter” fees for referrals of people for psychiatric treatment, whether needed or not. Nor is this only a US phenomenon. The Canadian government has also been subjected to the scam. Between 1987 and 1991, hundreds of psychiatric hospitals in the US billed the Ontario Health Insurance Plan (OHIP) for hundreds of millions of dollars for patients routinely sent there by “headhunters” who charged bounties to American psychiatric facilities for delivering patients. Thanks to the work of CCHR in Canada, the Ministry of Health filed suit against the psychiatric defrauders.


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