Diana Alba Soular

Las Cruces Sun-News

LAS CRUCES - Roque Garcia, the longtime executive director of a Las Cruces mental-health nonprofit applauded a Monday announcement by the state Attorney General's Office that cleared his organization and nine others of fraud allegations.

Garcia, of Southwest Counseling Center Inc., said the attorney general's conclusion to the 2.5-year investigation validates what the organization has said all along: that the state's allegations of criminal wrongdoing against it were unfounded.

But, Garcia noted, Monday's announcement doesn't alleviate a number of ripple effects that stemmed from the allegations. The state cut funding in mid-2013 from 15 providers across New Mexico, including Southwest Counseling and Families & Youth Inc. of Las Cruces. Garcia and others were forced to move out of state because of the difficulty in finding a job in New Mexico after the investigation was announced. And residents across New Mexico who need mental-health and substance abuse services are still feeling the negative effects of the shakeup, he said.

Garcia said the state Human Services Department's actions amount to injustice, "not only because of the attacks on our personal integrity or our personal financial losses and the indescribable unnecessary upheaval in our lives," but also because of "the fact that this administration put an unnecessary burden on taxpayer resources to purposely dismantle critical services without one shred of evidence."

FYI and southern Doña Ana County provider NM Human Development were among the agencies exonerated Monday. Some regulatory violations were uncovered among the providers, but they didn't rise to the level of fraud, Attorney General Hector Balderas stated in a letter to members of the Legislature.

"While we did find some regulatory violations, there did not appear to be a pattern of fraud for any of the 10 completed investigations," Balderas wrote.

The results of the investigations were being forwarded to the state Human Services Department, which oversees the state's Medicaid spending, for possible administrative action.

Balderas’ office is reviewing two remaining providers. His office previously found over-payment issues but no fraud with three other providers.

No regrets

HSD officials on Monday continued to stand by their actions.

“The undeniable facts are that a significant amount of public funding was misspent, and that shortchanged those in need in New Mexico," stated Kyler Nerison, HSD communications director, in a statement. "The Human Services Department will continue to work diligently to recoup the misspent and overbilled Medicaid dollars that were squandered by the agencies referenced in today’s decision by the AG. To date, we have recovered over $4 million in misspent money, the agency that prompted the 2013 audits was indicted for fraud and six individuals throughout this process have been indicted for embezzling or misspending Medicaid money."

Continued Nerison: "The decision to not prosecute clear over-billing and misusing Medicaid funds on things like private planes and luxury travel in the tropics belongs to the Attorney General. We respect but disagree with that decision and continue to believe that those funds should be used to help the people who need it the most."

Looking back

An initial audit in 2013 by the firm PCG raised questions about fraud and abuse, alleging $36 million in state Medicaid funding was mishandled by the providers. That prompted Republican Gov. Susana Martinez’s administration to freeze Medicaid payments to the providers while the Attorney General’s Office launched its inquiry.

HSD eventually replaced the nonprofits with companies from Arizona, despite protests that the due-process rights of the nonprofit providers were violated when the state froze payments without hearings. La Frontera took over services provided by a number of nonprofits, including those in Las Cruces. But after a number of problems revolving around finances, La Frontera pulled out of New Mexico in 2015. The local services were taken over by yet another provider, La Clinica de Familia, which also is facing challenges.

After taking office in 2015, Balderas requested an additional $1.8 million to speed up the investigation after the previous attorney general, Gary King, had warned it could take years to complete the inquiries. With that additional funding, Balderas hired auditing firm RSM to carry out a forensic audit, which formed the basis of Monday's announcement.

"Since we received these referrals from HSD as credible allegations of fraud, we primarily based our investigations on issues raised in the referral," Balderas stated in Monday's letter. "We came to different conclusions on many of the alleged violations cited in the PCG report, and ultimately did not find that the violations that we were able to substantiate reflected a deliberate or intentional pattern of fraud."

Senate President Pro Tem Mary Kay Papen, D-Las Cruces, said in a news release Monday that terminating payments to local Medicaid behavioral health providers did not need to happen.

“Cutting funding hurt many of our most vulnerable residents, and that was wrong," she said. "I don’t think any one of these providers intentionally made a plan to defraud the government in any way, shape or form. I want to know: Now what? We need to be looking at that."

Southwest Counseling Center Inc.

An investigative report tied to Southwest Counseling Center Inc., the main provider for years of Medicaid-funded adult behavioral health services in Las Cruces, showed that the auditor hired by Balderas' office examined data that had been looked at previously by PCG and another company, OptumHealth, which had a role in overseeing the state's Medicaid spending and also had done an audit.

More specifically, RSM searched for client files and reimbursement claims filed by Southwest Counseling Center for patterns that could indicate possible fraud, according to the report. The auditor sought to determine whether client records were complete; whether there were instances of one client being seen — and billed for — multiple services on the same day, something that could indicate duplicate billing; whether there were overlapping treatment sessions, which also could indicate overbilling; and other questions.

Each Medicaid-funded service provided to a client corresponds to a certain code that's used for billing purposes. Per regulations, some types of services can be provided and billed for at the same time as other types of services and others can't be provided at the same time, according to the report. The forensic auditors found 393 instances of "code overlap" for Southwest Counseling Center Inc., the "majority" of which were allowable overlaps. However, the ones that weren't allowed by spending rules, "do not appear to indicate a pattern of fraud," the report states. Also, nonprofit employees must have certain credentials, such as academic degrees, to bill for certain levels of service. The auditing firm concluded there wasn't a pattern of fraud tied to the credentials connected to Southwest Counseling, according to the RSM report.

Families and Youth Inc.

Families and Youth Inc. was the main Medicaid-funded provider of youth behavioral health services in Las Cruces before the mid-2013 shakeup.

RSM examined possible double billing instances with FYI, but "did not demonstrate a pattern and (they) were minimal enough that they did not require further investigation for fraud," the investigative report states.

RSM wrote that most of PCG's audit findings connected to FYI were tied to a lack of documentation and lack of practitioner credentials, according to the AG's investigative report.

FYI had trouble providing some additional records sought by an RSM auditor, according to the report. That's because, when La Frontera took over as the provider agency in 2013, FYI's Medicaid files were left behind for the new provider to make copies. The files were taken to Albuquerque for copying and were "returned in no discernible order," to FYI, the report states.

"This made it difficult for FYI to find the documents that I requested," the RSM auditor wrote.

The company that made copies of the documents reported having sent them to the AG's office; however, the auditor couldn't locate the files at the AG's office.

In another instance, a former FYI employee explained to RSM about missing paperwork, known as "assessments," tied to a program, called Multi-Systemic Juvenile Therapy Services. The employee said the service was "out of South Carolina and that those consultants did not want them to do assessments because they did not want to focus on the past but instead focus on the future," according to the report. Practitioners "did weekly treatment plans instead," according to the report.

There was "insufficient evidence" to support a "finding of fraudulent activity," the RSM auditor wrote.

"However, I did find lack of documentation and inappropriate billing practices, which were found to be supported by the investigation," according to the RSM auditor.

Jose Frietze, director of the FYI, responded to Monday's decision, saying Balderas provided a thorough assessment that found no fraud.

"It is evident that in their rush to judgment to accuse Families and Youth Inc. of Medicaid fraud that HSD got it wrong," he said.

Frietze said FYI had provided roughly three months of services prior to the mid-2013 shakeup that were never reimbursed by the state. Given Balderas' announcement, Frietze said it's "imperative" the state now pay for those properly provided services, valued at about $1.9 million.

"It's equally important that HSD restore Families and Youth Inc. to a full-services Medicaid provider," he said.

Frietze acknowledged that, with the volume of services provided by his agency, there likely were billing errors.

"But it is nowhere near this amount that has been withheld from us that we've earned already," he said.

Two investigations pending

The behavioral health care shakeup has led to calls for changes in the way New Mexico handles claims of fraud and over-billing. However, legislation failed last year that would have established certain procedures for the HSD to follow when determining whether an allegation is credible.

The investigations that have been completed include Border Area Mental Health Services, Youth Development Inc., Hogares and Presbyterian Medical Services, among others.

The two remaining investigations involve the nonprofits TeamBuilders, an agency that had a presence in Doña Ana County and other counties, and Pathways Inc.

A number of former providers are pursuing a lawsuit in federal court against the state, alleging violations of their civil rights. Garcia said Southwest Counseling Center also is exploring "other options."

"Southwest Counseling has been providing services as a community mental health provider in Las Cruces for 50 years," he said. "They closed the organization down without any actual evidence whatsoever. It was just allegations."

The Associated Press contributed to this report.

Diana Alba Soular may be reached at 575-541-5443, dalba@lcsun-news.com or @AlbaSoular on Twitter.