A Chattanooga mental health facility has agreed to pay $800,000 to settle federal and state allegations that it made fraudulent claims to the state's Medicaid program over a three-year period.
The settlement, reached last week, ends a lengthy state and federal investigation into billing practices at the AIM Center, a nonprofit organization at 472 W. Martin Luther King Jr. Blvd. that offers a range of rehabilitative services to the mentally ill.
The investigation began in 2011, when a former AIM Center member filed a whistle-blower lawsuit alleging the facility was improperly billing TennCare for 52 visits -- none of which involved the kind of care approved for Medicaid reimbursement.
Government officials later claimed that from 2009 to 2012, AIM Center made a series of false Medicaid claims by knowingly overcharging for services it provided to members insured through TennCare.
AIM Center president Rodney Battles maintains that its billings to TennCare were in line with the center's contract with the state.
"We made the decision to settle to avoid an expensive legal battle in court," Battles said. "We're moving forward and still doing what we've been doing for years, which is helping people with mental illness."
The AIM Center practices the "clubhouse" model of rehabilitation, where clients are considered "members" who work collaboratively with staff to develop life skills, find housing and secure job placement, among other goals.
State law mandates that TennCare should be billed only for "psychosocial rehabilitative services" for specific interactions, such as face-to-face sessions between the client and an approved specialist or mental health practitioner.
But the Tennessee Attorney General's office and the U.S. Attorney's office say during the three-year span the AIM Center developed a pattern of "upcoding," or submitting claims for services that are more expensive than care actually provided.
In one example, the AIM Center filed claims for a full day of rehabilitation services for TennCare members, even though the members spent as little as 5 minutes to an hour at the center, government officials said.
In the original whistle-blower complaint filed in 2011, member Dennis Dodson listed 52 occasions he signed into the AIM Center, all of which were billed to TennCare.
In none of the visits, he claimed, did he receive such services.
Often the visits were listed as support group meetings, and planning meetings not involving AIM staff. In one case, TennCare was billed for when he signed in to eat a Thanksgiving meal at the center, Dodson claimed.
Government officials said that the AIM Center benefited from "double billing" -- submitting separate claims for the same services -- during this period.
"Funding for mental health services is an area of significant need for our community," U.S. Attorney Bill Killian said in a statement. "It is critical to the continued viability of our system that providers bill public health care programs only as authorized by law."
Tennessee Attorney General Bob Cooper said his office "will continue to pursue providers that improperly bill for these needed services."
Dodson's attorney, Robert Sauser, declined to comment about the settlement on Tuesday afternoon.
The AIM Center emphasized in statements Tuesday that the government never claimed that the center failed to provide services, and added that its future services will not be limited by the terms of the settlement.
None of the nonprofit's funds put toward the settlement came from donations or grants, AIM officials said.
As part of the settlement, the AIM Center has entered into a five-year Corporate Integrity Agreement with the federal government to ensure compliance with benefit programs, the attorney general's office reported.
Battles said the organization welcomes the extra supervision.
"It's going to ensure all systems are 100 percent compliant for the next five years, and that will build a good foundation going forward," he said.
Contact staff writer Kate Harrison at firstname.lastname@example.org or 423-757-6673.