Centria Healthcare accused of fraud, targeting poor in metro Detroit

Michigan’s largest autism therapy provider is accused of running a Medicaid fraud scheme targeting poor and minority communities, particularly in metro Detroit, according to former senior executives.

Former employees of Centria Healthcare, who now find themselves defendants in a defamation lawsuit filed by the company, claim the business has engaged in billing fraud, violating patient privacy, forgery, falsifying reports and employing unqualified people in an effort to boost profits, according to court filings, documents reviewed, and interviews conducted during a three-month Free Press investigation.

Centria denies any wrongdoing. In December, it filed the defamation suit against several of its accusers, a move that made the allegations public for the first time.

"Whatever these allegations are, yes, they're very outrageous, but they're not true," said Centria CEO Scott Barry. "And we're trying to do a good job to help kids and help families and help our community."

More in our investigation:

Autism treatment firm lands $8M state grant

Lt. Gov. Brian Calley interviewed about Centria Healthcare

How Michigan's largest autism therapy provider lost $8M grant

In response to inquiries from the Free Press, the Michigan Attorney General's Office confirmed it is investigating Centria.

"To protect the integrity of evidence; to encourage the cooperation of witnesses; to give due deference to privacy considerations, and to assure fairness to the subject of the investigation, the department must withhold the information from public disclosure at this time," Christy Wendling-Richards wrote in denying a Free Press request made under the Michigan Freedom of Information Act. The denial noted the office has 980 pages of documents that can't be released at this time.

Several sources said the former Centria employees also have taken their claims and thousands of documents to the FBI, which declined comment.

“Unequivocally, we have not been contacted by any law enforcement agencies in regards to these claims,” Barry said during an interview.

Centria's defamation lawsuit names the company's former chief compliance officer, Vanessa Pawlak, former senior sales executive, Curtis Moore, and another former employee, accusing them of spreading lies about the company.

Pawlak and Moore have filed lawsuits of their own. Pawlak claims she was fired for her "refusal to be complicit in ... wrongdoing." Moore, who was fired in May 2017 for what the company called poor performance, is suing under the Michigan Whistleblower's Protection Act.

The legal brawl comes just four months after Centria was awarded an $8-million state grant contingent on creating 1,200 new jobs over five years.

Beginning in November, the Free Press examined thousands of internal and public documents related to Centria and also spoke to seven other former employees not involved in litigation who echoed concerns about the company. Several others reached by the Free Press declined comment.

Company attorneys said Centria has been audited about 70 times by 40 different regulatory bodies since June 2016, none of which resulted in a material finding against the company.

“Centria takes these allegations, which smear the integrity of the company, very seriously and is vigorously pursuing those it believes to be responsible,” attorney Ethan Holtz wrote. “Centria looks forward to vindication when it has its day in court.”

The allegations against Centria come as Michigan expands treatment opportunities for autism, a developmental disability marked by challenges with social skills, speech and other communication impairments, difficulty with repetitive behaviors and sensitivities to sights, sounds, smells and touches.

The state estimates at least 50,000 Michigan residents have some form of autism and the federal Centers for Disease Control and Prevention estimates it can be found in one in 68 school-age children. There is no known cure but therapy has been proven to help children improve on a variety of tasks.

Mandated coverage

Centria formed in 2009 and said that last year it had more than 5,000 employees, 3,500 clients and operated in nine states.

The company provides nursing, rehabilitation and other health services to patients in their homes. In recent years, it has become Michigan’s largest provider of a leading form of autism therapy, known as applied behavior analysis.

Among the Centria employees are behavior technicians, known as techs, who visit autistic children in their homes to observe their behavior and help them improve basic skills such as looking, listening and imitating. More advanced children can work on reading, conversing and understanding another person’s perspective.

The market for that therapy boomed in 2012 when Michigan passed a law requiring health insurers, including the state’s Medicaid program for poor residents, to pay for it.

Autism therapy can be lucrative. Techs, who don’t need a college degree, typically start at $13-14 per hour with no benefits while the company can bill Medicaid an average of $55 per hour. The company also can bill at higher rates for the people who supervise the technicians.

Moore said that, depending on the treatment plan, the company can bill between $45,000 and $60,000 per child, per year.

“There is so much money in autism,” Moore said.

Centria has expanded quickly and is moving to a new headquarters in Farmington Hills. The City of Farmington Hills has offered to help the company with recruiting new employees.

The company’s current headquarters in Novi has perks designed to appeal to young workers, including company lunches, a ping-pong table and a golf simulator, former employees said. In his office, Barry keeps a taxidermized bear he killed on an Alaskan hunting trip.

'Law Enforcement Summary'

In its defamation lawsuit filed in Oakland County, Centria accuses the employees of creating a letter titled “Law Enforcement Summary,” which the company says “includes numerous defamatory statements concerning Centria’s business practices and about the conduct of certain of its executive employees.”

The letter was sent to companies and government agencies to harm Centria’s business, the lawsuit claims.

Among many accusations, the letter cited in the lawsuit says that Centria and its executives:

Engaged in a racketeering scheme specifically designed to diagnose children with autism who do not have autism or who do not have autism to the level of diagnosis.

Forged parent signatures on care contracts or otherwise sign off as the child’s parent in the system for those parents who exhibit broken English.

Have sought to run a Medicaid fraud scheme in the state of Michigan.

Are aware that employee files and patient files are stored in unsecured rooms and in employee vehicles and homes.

“Each of the statements cited in the letter are false and were known to be false when printed,” Centria said in its defamation suit, which seeks a court order to stop the former employees from circulating the letter.

Late last year, the company demanded retractions from Moore, Pawlak and another former colleague named in the suit, Samantha Gates. All three refused, according to Centria’s court pleadings.

Red flags

Pawlak joined Centria as chief compliance officer in late November 2016. She said she noticed red flags almost immediately.

Her first week on the job, she said she raised concerns about the security of the company’s computer network, which houses thousands of records on patients and employees. Pawlak said regulations require an annual security assessment, which must be kept on file.

Pawlak said she asked Barry, the CEO, about it repeatedly but he responded that he didn’t want her wasting time on compliance.

“He said ‘Don’t f---ing ask me about it again. We are secure,’ ” Pawlak said.

To emphasize the point, Pawlak said, Barry scrawled the words “We are secure” on a piece of legal paper, initialed it, dated it 12/2/16 and slapped it on the desk in front of her. She said she placed it in a binder for safekeeping.

Barry acknowledged writing the note, but said it came as a joke at the end of a long discussion about the security of the company's network.

"After this whole conversation, she deadpans to me, 'but it's not in writing,' " Barry said. "So as a humorous attempt to joke after we've just spent all this time talking about this situation and what we're doing about it, I put it in writing and it is true. We are secure. ... It’s funny that a moment of humor in a very serious conversation is being used in this way and twisted in this way."

Pawlak was fired Feb. 3, 2017, just two months into her tenure. The company said she was fired for improperly sending sensitive company information to her personal e-mail account.

E-mails reviewed by the Free Press show Pawlak repeatedly alerting top company officials to compliance issues, including employee credentials. In January 2017, Pawlak alerted Barry in an e-mail that she had serious concerns about compliance.

Barry replied that he wanted Pawlak to bring forward compliance issues, but disputed the claim that Centria was fraudulently misrepresenting its employee credentials.

"I believe that there may be a fundamental misunderstanding regarding this issue," Barry wrote in a Jan. 18, 2017 e-mail reviewed by the Free Press. "Centria would never knowingly defraud any person, company or payer entity."

The Detroit Wayne Mental Health Authority, one of Centria's largest referral providers, questioned the company about concerns raised in an anonymous letter in February 2017 that some employees lacked proper credentials.

Centria said it hired a law firm, Health Law Partners, to investigate those concerns. That firm concluded they were “unfounded.” Centria said it hired a second law firm, DeBruhl Haynes, which concurred.

The Detroit Wayne Mental Health Authority sent a letter to Centria to conclude the matter, saying: "DWMHA staff reviewed the files ... and determined that the proper licensing and credentialing requirements had been met."

The authority noted that it didn’t receive copies of the investigations conducted by the law firms because of attorney-client privilege. Instead, it relied on summaries provided by Health Law Partners.

The authority also reserved its right to reopen the investigation if new information is provided.

Pawlak said Barry and others at Centria would not allow her to speak directly to mental health authority officials, despite her position as chief compliance officer.

While company officials stress that numerous audits around the state have not signaled any issues concerning the company, former employees cast doubts on the accuracy of those findings.

Several former Centria employees who spoke with the Free Press described a frantic scramble during Thanksgiving week 2016 to "clean up" the personnel files for an audit. The team was asked to stay late into the evening to insure required paperwork like proof of training and current certifications for CPR were in the files.

Abby Pendleton of Health Law Partners said there could be situations where qualification could be obtained after the employee has begun serving the patient. She noted that Centria helps employees with professional development and training.

One former recruiter, who spoke to the Free Press on the condition her name not be used, said that on files where a certification was lacking or expired, she called techs on the eve of Thanksgiving and ask them to get up to date so Centria could pass the audit.

"If they take the course by 7 a.m. on Friday, we'll give them $100 bonus," she said.

25 to thrive

The company’s growth has been fueled by enrolling autistic children eligible for therapy service. It recruits families in schools, invites children to autism-friendly movies and sponsors community events like arranging visits with Santa or superhero characters.

Moore said many of Centria's clients are from Wayne County.

“A lot of them are African-American poor, Middle Eastern poor, people who don’t speak English," he said.

Other former employees said they sought translators to communicate with families but got pushback from the company.

The Law Enforcement Summary, cited in the lawsuit, claims Centria, “forged parent signatures on care contracts or otherwise sign off as the child’s parent in the system for those parents who exhibit broken English and are uncertain of the services Centria is pressing on their family.”

Barry said the company is not required to provide translators. Barry cited the case of a single family where the company spent $40,000 on translation services in one year. He added that the company estimates less than 5% of its clients don't speak English, but tries to accommodate them.

"We find an employee who speaks the native language for that family," Barry said. "That's a vast majority of the situations that we work in."

Former employees said once a child was diagnosed with autism, Centria officials pressed to max out Medicaid billings, regardless of the child’s true needs.

“They gave us this 25 to Thrive thing, where they said they don’t want us to prescribe under 10 hours a week because research shows that it’s not effective” said a former Centria supervisor, who spoke on the condition that her name not be used.

She said research does show that less than 10 hours of therapy per week is ineffective, but still noted misgivings about being told what to order and objected to a flow chart that Centria required staff to follow to convince parents to agree to 25 to 40 hours per week of therapy.

Centria maintained internal rankings for supervisors whose billing hours weren’t high enough and called them into meetings to discuss why, she said.

“So we should be prescribing 25 hours a week and if we didn’t prescribe 25 hours a week, we would get called in,” she said. “That’s telling your staff to go out and trump up Medicaid hours to make more money for you.”

Lacey Weber, a former supervisor for Centria who has an autistic child of her own, said the program was focused on money rather than the needs of the child.

“I felt they were trying to pressure me to recommend more hours for services of applied behavior analysis even if I didn’t feel the child needed that many hours,” Weber said.

She said she consulted an attorney and submitted a complaint to the attorney general and then resigned from the company.

They were requiring supervisors who didn’t recommend at least 25 hours to submit assessments to a board and justify their lower billing hours. “It was another bullying tactic,” Weber said.

Barry defended the 25 to Thrive initiative.

"This is not a business policy, this is a clinical policy," Barry said, noting that clinical literature shows that "Children receive the best outcomes ... by following a comprehensive treatment plan, which is generally defined as 25-40 hours of therapy per week. It is clinical best practice in our field."

Billing issues

In interviews, court filings and records filed with the state, Centria has been accused of improper billing.

Weber said she was asked to take over on a case that had not had a supervisor in months. She said the company had been billing on the case.

"I had reported that to my direct supervisor and they continued to try to force me to take that case, but I told them I wasn’t willing to participate in fraud," Weber said.

Barry said the company doesn't bill for services it doesn't render.

"That would be a strict violation of Centria policy," Barry said. "Anyone who reported providing a service that they did not render and did not render appropriately, would be subject to immediate termination by our company and if we found that out, we would immediately contact the payer, we would withhold or revoke any billing that we found ... not rendered appropriately, and we would immediately, like same day, pay back any funds that we received for anything that was not provided correctly.

"We do not need to commit fraud, it is not in our mission," he said.

In recent years, the Michigan Department of Health and Human Services found Centria had been overpaid by Medicaid and sought reimbursement. In one case in 2015, the company was ordered to repay $10,659 for 70 claims with missing or insufficient records.

Two years later, the company was cited again, this time for $5,998 for a private-duty nursing bills submitted on seven patients who were hospitalized at the time, according to a review conducted by the Office of Inspector General at the MDHHS.

Centria’s lawyer, Holtz, said the company bills for thousands of transactions and acknowledged that “clerical errors do occur.”

“When these events occur, they are identified, reconciled and resolved immediately in the normal course of business,” Hotlz said.

Patient privacy

The Health Insurance Portability and Accountability Act, known as HIPAA, requires health care providers to take detailed steps to protect patient privacy, including in the handling of medical records.

Court pleadings show allegations of frequent privacy violations and several other former employees who spoke to the Free Press describe a lackadaisical approach to patient privacy at Centria’s main office.

“Employee files and medical records are mixed in the same file cabinets in unsecured rooms, locations, and often in the backseat of employee (cars), their trunks and homes,” the suit claims.

“That’s a HIPAA violation,” said Chelsea Burns, a former payroll supervisor. “All of the files on our patients are right there.”

Barry said the company complies with HIPAA.

"There are no regulations that dictate explicitly how employees of any company providing any health care service, are supposed to transfer information, transport information, coordinate care, or provide care with regard to protected health information under HIPAA," Barry said. "It doesn't exist. The government doesn't say 'you shouldn't use personal e-mails. You shouldn't drive files in cars. You shouldn't have files out at your desk. You shouldn't have files under your desk. ... They don't say that."

Barry said employees should be trained on proper protocol to reasonably protect patient information as they do their jobs.

Burns said she was fired in April 2017 after almost two years with the company. She said she was fired for submitting documentation that wasn’t approved, a claim she denies. Burns said her firing came two weeks after she filed a harassment complaint.

Burns said firings and other departures were common at Centria.

“Turnover was extremely high,” she said.

Barry said the company does experience turnover because assignments end, employment situations change and people quit or get fired. He estimated that 2,000 people who worked for the company last year are no longer with Centria.

"I'm sure some of them did not enjoy the Centria experience and yet a lot of people do enjoy the Centria experience," Barry said.

Several former employees who worked in recruiting describe the pressure they were under to hire techs and others to keep up with the company’s aggressive expansion.

“In the beginning, it would be teachers, who would teach until 3 p.m. and then do therapy for three hours,” said a former recruiter who spoke to the Free Press on the condition her name not be used.

But as the growth quickly intensified, the threshold for qualified candidates dropped, she said.

“These are sandwich artists. These are people from McDonalds,” said the former recruiter, who was fired by Centria in February 2017 after about nine months with the company. “Toward the end of recruiting, if you have a heartbeat, you'll get an interview and we'll probably hire you.”

Barry called those kinds of comments a "gross mischaracterization" of Centria's recruiting efforts, adding that people from various backgrounds, from teachers with master's degrees to fast-food workers, could be great at the job.

"What this job requires is loving kids and being passionate about helping children..." Barry said. "If you go through our interview process and you demonstrate the competencies and abilities and desire to do a great job and change the life of a child with autism, heck, yeah, you can work here."

The former recruiter is considering filing her own lawsuit against Centria and has already been in contact with John Harrington, a Warren lawyer who represents Moore, Pawlak and Gates in their suits against Centria.

Harrington said he originally agreed to represent Curtis Moore in his case against the company for wrongful discharge.

"When we took this case, we thought it would be a pretty standard whistle-blower case," Harrington told the Free Press. "And nothing as explosive as it's become."

Contact John Wisely: jwisely@freepress.com or 313-222-6825. Follow him on Twitter: @jwisely

Contact Elisha Anderson: eanderson@freepress.com or 313-222-5144. Follow her on Twitter: @elishaanderson

Mark J. Rochester is a senior news director overseeing investigations and watchdog reporting. Contact him: 313-222-8657 or mrochester@freepress.com.