By: Christopher A. Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, Ma.
A Health Law Defense and Compliance Firm

In a recent case, the U.S. Attorney’s Office for the Southern District of Texas brought to light a significant instance of Medicare fraud that underscores the urgent need for stringent compliance measures in the mental health care sector. Gwendolyn Gibbs, the owner of Daybreak Rehabilitation Center, has been sentenced to seven years in federal prison for her role in orchestrating a $15 million PHP fraud scheme.

From 2007 to 2016, Gibbs submitted fraudulent claims for partial hospitalization program services that were either not provided or medically unnecessary. These services are typically reserved for severe mental illnesses requiring intensive outpatient treatment. However, the patients involved, many of whom resided in group homes for individuals with intellectual disabilities, did not require these intensive services. Gibbs further manipulated the system by falsifying medical records to exaggerate patient conditions, thereby justifying unnecessary Medicare billing.

The case also revealed that Gibbs engaged in illegal kickback schemes, paying owners of group homes and patient recruiters to direct Medicare beneficiaries to Daybreak. In return, Gibbs provided transportation, supervision, and meals to the group home residents, creating a circle of complicity that perpetuated the fraud. The court’s decision to impose a substantial prison sentence and order restitution of over $8.6 million to Medicare reflects the severity of Gibbs’ crimes and serves as a stark reminder of the critical importance of compliance within an organization.

At Parrella Health Law, we believe this case should serve as a wake-up call for healthcare providers. Implementing robust compliance programs and conducting regular audits are crucial steps in safeguarding against fraud and ensuring that services are provided ethically and legally. Moreover, training staff to recognize and report unethical practices is vital in maintaining a culture of integrity and transparency. If you have any questions or would like to discuss how Parrella Health Law can assist your organization, please call 857.328.0382 or email me directly at cparrella@parrellahealthlaw.com.

Christopher Parrella, ESQ, CPC, CHC, CPCO, is the founding partner of Parrella Health Law in Boston, Mass. The firm focuses exclusively on healthcare defense and compliance matters. Chris also travels the country on behalf of a wide range of healthcare organizations, lecturing on a variety of health care enforcement and compliance topics. Chris is one of a handful of health care attorney’s that are also Certified Professional Coders (CPC) and is a member of the AAPC’s National Legal Advisory Board and Ethics Committee.  He is also a Certified Professional Compliance Officer (CPCO) and Certified in Health Care Compliance (CHC.)