New Report Discloses How Psychiatric Fraud Creates Harm–It Costs Both Financially and in Patients’ Lives

CCHR urges that if anyone has been employed in the mental health industry and has witnessed improper billing, falsification of medical records, patient abuse or other types of healthcare fraud or criminal conduct, to contact CCHR.

By CCHR International
The Mental Health Industry Watchdog
February 21, 2017

A new report on mental healthcare fraud released by Citizens Commission on Human Rights International (CCHR) reveals a staggering $3.7 billion in criminal and civil settlements and fines among five companies over the past 25 years in the United States—or an average of $148 million each year. CCHR says greater accountability is needed in the mental health system to prevent fraud and protect patients.[1]

For Medicaid and Medicare fraud carried out by mental health providers, one study identified almost $1 billion in false claims reported in 2014 alone.[2]

CCHR, a 48-year mental health watchdog group, says the report, provided to attorneys and legislators, recommends a system of intensive reporting of practices that would require psychiatric and behavioral facilities to be accountable for taxpayer funding, including Medicare and Medicaid coverage. It points to the subjectivity in psychiatric diagnosing as a source for fraud to be easily committed.

Mental problems are tragic and can need help, but they are not the same as medical diseases. They are not “discovered,” but are subjective, based largely upon behavioral symptoms that psychiatrists agree upon and vote to include in their Diagnostic & Statistical Manual for Mental Disorders (DSM). The DSM codes are used to bill insurance companies.

The late Dr. Thomas Szasz, professor of psychiatry and CCHR co-founder explained: “There is no blood or other biological test to ascertain the presence or absence of a mental illness, as there is for most bodily diseases.” This makes it easy to change a psychiatric diagnosis and defraud the system.

Dr. Robert F. Stuckey, a former medical director of a psychiatric hospital investigated for fraud in the 1990s, said that psychiatrists and hospital staff “were absolute geniuses at diagnosing insurance.” Further, “The patient usually received the diagnosis that matched the category with the most money available to it.…The primary function of the hospital, a function so important that it rendered all other functions incidental, was to extract every single penny possible from the patients.”[3]

In December 2016, a BuzzFeed News exposé on Universal Health Services (UHS), which owns the largest psychiatric hospital chain in the U.S., reported that the symptoms of people admitted to UHS behavioral facilities could be exaggerated or twisted to make them seem suicidal. In this way they could be held “until their insurance payments ran out.” UHS is under federal investigation into whether the company committed Medicare fraud. The probe involves more than one in ten UHS psychiatric hospitals.[4]

On 9 February 2017, the Department of Justice (DOJ) reported that a UHS behavioral facility in Texas recently agreed to pay $860,000 to resolve False Claims Act allegations against it that began when the facility, University Behavioral Health (UBH), now known as El Paso Behavioral Health, was owned by the company, Ascend. UHS acquired Ascend in October 2012. The facility had had an “agreement” since 2010 with a doctor, paying him kickbacks for referring patients to UBH. According to the DOJ, UBH paid him for services that were not rendered and he improperly referred patients to UBH for Medicare-reimbursed services. Although the agreement began while under ownership of Ascend, it apparently continued for 14 months while under UHS ownership until, according to the DOJ, UHS terminated the “professional services agreement” with the doctor on Dec. 31, 2013.[5]

CCHR’s recommended report system includes each psychiatric facility that receives federal or state funding, disclose annually the number of admissions including whether voluntarily and, once admitted, kept involuntarily; the breakdown of diagnoses given patients and number of patients whose diagnosis changed after admission.

The group points to such studies as that published in the International Journal of Pharmaceutical and Healthcare Marketing which found the only medical specialty wildly overrepresented in the ranks of Medicare fraudsters was psychiatry.[6] While Richard Kusserow, a former Department of Health and Human Services Inspector General, independently stated: “Many health care fraud investigators believe mental health caregivers, such as psychiatrists and psychologists, have the worst fraud record of all medical disciplines.”[7]

CCHR urges that if anyone has been employed in the mental health industry and has witnessed improper billing, falsification of medical records, patient abuse or other types of healthcare fraud or criminal conduct, to contact CCHR and report what they have seen. “If you know something but fear retaliation if you were to report it, rest assured all 50 states have enacted whistleblower protection statutes to preserve your rights and protect you. By providing information on fraud and crimes in the field of mental health you could spare patients further suffering and also help protect fellow workers concerned about improving conditions in the mental health system,” CCHR’s international president, Jan Eastgate encouraged. Contact CCHR: 1-800-869-2247 or email Or you can submit a report online here.

To find out more about CCHR, click here.




[3] Joe Sharkey, Bedlam: Greed, Profiteering, and Fraud in a Mental Health System Gone Crazy, pp. 215, 216.



[6], pp. 8-33