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

Bournewood Health Systems, operating as First Psychiatric Planners, Inc., has agreed to pay up to $6.5 million to resolve allegations under the federal and Massachusetts False Claims Acts.

The behavioral health provider, located in Brookline, Massachusetts, was accused of violating anti-kickback statutes by offering free sober housing to Medicare and Medicaid patients as a means to induce them to enroll in its Partial Hospitalization Program (PHP). This kickback scheme not only compromised patient care but also exploited vulnerable individuals seeking recovery.

Between September 2013 and May 2022, Bournewood entered into contracts with sober homes, paying housing fees only if patients attended their PHP. These arrangements did not require patients to be homeless or in financial distress to receive free housing. Once a patient stopped attending the PHP, Bournewood ceased paying for their sober housing, regardless of their housing needs or financial status.

The United States contends that this arrangement induced patients to enroll in and stay with the PHP, which led to fraudulent claims submitted to Medicare and Medicaid. The primary sober homes involved—Steps to Solutions, Brady’s Place, and Recovery Education Services—were linked to severe legal issues, including tenant exploitation and fraud. The most notable case involved the owner of Steps to Solutions, who was found liable for sexual harassment and retaliation against sober home tenants, resulting in a $3.8 million jury award.

This case highlights the risks when financial incentives compromise patient care, with Acting U.S. Attorney Joshua Levy emphasizing the danger of placing profits over the well-being of vulnerable patients. The settlement reflects the government’s commitment to protecting health care programs from fraudulent practices and ensuring that medical judgments are based on patient care, not financial gain.

At Parrella Health Law, we understand the complexities of regulatory compliance in the healthcare sector. If your organization needs guidance on ensuring compliance with anti-kickback statutes or any other healthcare regulations or investigations, we’re here to help. Contact us at 857.328.0382 or reach out to Chris at cparrella@parrellahealthlaw.com for more information.