Published on October 16, 1997
Maximize Profits, Lock Up
By Judith Moore
Christy Scheck, on March 6, 1992, a Friday
evening, walked into a bathroom in Southwood Psychiatric Center's
Residential Treatment Center in Chula Vista (now called Bayview and
under new management). Thirteen-year-old Scheck had been a patient
at Southwood, a for-profit psychiatric facility, since early
November 1991. Christy slipped off the sash from her bathrobe and
hanged herself. She died, without regaining consciousness, two days
later in Children's Hospital's intensive care unit.
Christy's parents, Robert and Merry Scheck, in
March 1994 brought suit against Southwood Psychiatric Institute and
its corporate owner, National Medical Enterprises. Also named were a
series of defendants, including Christy's psychiatrist at Southwood
and a number of workers employed at Southwood. The Schecks' suit
alleged that the defendants engaged in insurance fraud, "crafted
diagnoses to meet patients' insurance coverage," failed to properly
train staff, used unlicensed staff in positions for which
regulations required licensed workers, decreased patient-staff
ratios to unsafe levels, and awarded bounties to employees as
incentives to acquire and keep patients longer than their condition
warranted. There were more charges - fraud, breach of contract,
medical malpractice, and finally, wrongful death. In July 1994, days
before going to trial in San Diego County Superior Court, Scheck vs.
Southwood was settled in mediation in favor of the Schecks.
David R. Olmos, writing in the Los Angeles
Times, described Southwood's out-of-court settlement with the
Schecks as "an extraordinary admission of corporate responsibility."
Olmos added, "It is the first admission of responsibility in any of
the nearly 150 lawsuits alleging physical mistreatment and abuse of
patients that NME [National Medical Enterprises] has faced since the
late 1980s. The Santa MonicaPbased hospital firm has settled about
75 percent of those cases but had never admitted responsibility."
Olmos also noted that in June 1994, just previous to their
settlement with the Schecks, "NME settled a federal fraud
investigation of its psychiatric and substance abuse hospitals by
paying $379 million in fines and restitution."
Now, Leon Bing, the Pasadena-based author of
two previous books that focus on teenagers, Do or Die and Smoke, has
written about what happened to Christy Scheck and why. Billed as "a
tragic story of what happens when a medical care system cares more
about profit than medicine," A Wrongful Death: One Child's Fatal
Encounter with Public Health and Private Greed (Villard Books) mixes
the Schecks' story with investigation of for-profit psychiatric
institutions whose patients are primarily adolescent. If you are a
parent, grandparent, aunt or uncle, if you are a teenager, A
Wrongful Death is a book you should read and study.
The gist of Ms. Bing's book is this: when the
Schecks, at the recommendation of their family therapist, entered
Christy in Southwood, "They had no idea that the hospital's CEO had
instituted an unlawful system to extract extraordinary levels of
profits. Insurance policies were processed to maximize
reimbursements; the staff held 'chart parties' to ensure that
patients' records would reflect a need for continued treatment;
psychiatrists' hours were drastically reduced; and families were
shut out of decision-making processes. Tragically, this non-care led
Christy to an overdose of medication that resulted in
hallucinations. She wrongly accused her father of sexual abuse, and
ultimately Christy committed suicide."
Further, writes Ms. Bing, the Schecks, when
they brought Christy to Southwood, had no idea that the hospital
"was one of a chain of 76 hospitals spread over 24 states. The chain
was known as Psychiatric Institutes of America (PIA), and its
corporate parent was National Medical Enterprises (NME), a $4
billion company. [The Schecks were] unaware that another pia
facility, Colonial Hills Hospital in San Antonio, Texas, was at the
eye of a controversy that had culminated, two months earlier, with
the Texas attorney general filing suit against PIA, alleging
On the afternoon that Ms. Bing and I talked, I
said that 20 years ago placing a troubled teenager in a psychiatric
hospital or residential treatment center was something about which
one never heard.
She agreed. "Twenty and 30 years ago, if kids
acted out and it was really extreme behavior, a boy might be sent to
forestry camp or military school and a girl to boarding school. It
had to be a pretty extreme case for a teenager to be sent even to
therapy, let alone to a private psychiatric hospital. If the family
couldn't afford any of this, then they just dealt with the kid as
best they could.
"But now because most health insurance covers
this hospitalization, kids are more likely to be sent away to a
treatment center. I can't think of any other reason than this
availability of insurance money. The world is certainly more
violent, kids are facing more problems - gangs, sexual
experimentation can kill them. There are a million more reasons why
this is not as gentle a time as it was two and three decades ago.
"However, if we were interviewing a journalist
in 1945, we would probably hear similar statements. 'The times are
so violent.' In the 1920s, you might have been told, 'Kids don't
have manners anymore, and they're running around in roadsters.' I
think each generation has had similar complaints about young people.
So that all I can figure is that the reason so many kids are sent
into residential hospitals is because the insurance pays the
Because Robert Scheck was a retired career Navy
man, CHAMPUS was the Schecks' health insurer. "CHAMPUS," Bing
writes, "stands for Civilian Health and Medical Program of the
Uniformed Services, a federal health insurance program that covers
both active and retired military personnel and their families.
CHAMPUS mental-health benefits include 30 days annually of inpatient
care for adults, 45 days for children, and 150 days for adolescents
in residential treatment centers. Additional days are authorized
when deemed necessary.... Bob Scheck was not on active duty, so his
champus benefits would cover 80 percent of Christy's hospital fees.
If Scheck had been on active duty, CHAMPUS would have paid the full
As Ms. Bing interviewed persons knowledgeable
about medical insurance providers and their relationship to
psychiatric hospitals, she learned that teenagers whose parents are
covered by CHAMPUS are considered particularly desirable by hospital
marketers assigned to "gets heads in the beds." She quotes from an
interview with a past employee of Southwood.
"Every morning we'd start the day off with an
intake meeting in which we'd review marketing contacts, incoming
calls, evaluations, and admissions from the previous day. And we'd
look at the discharge calendar, to see who was getting out, and we'd
look to see what patients would be left and what their coverage was.
The reimbursement rate was different for each company (the payor),
and the payor mix was determined by which patients were covered by
what policy. CHAMPUS, which paid approximately $1000-per-day for
every CHAMPUS patient, was at the top of the list. MediCal, at about
$350 per day, was at the bottom. All other coverage - Medicare,
Aetna, and so on - was in between."
Ms. Bing's informant explained that on at least
one occasion while he was at Southwood, a MediCal patient was
dismissed before she was ready in order to make room for a patient
whose parents could afford the $1000-per day fee. "That," he told
Ms. Bing, "is human damage perpetrated for a $600-a-day difference
in bed rate. That's a real story, and that's only one of them. Over
a payor mix." I noted that Ms. Bing's book makes clear that many of
these teen psychiatric care facilities send the patient home when
his or her insurance runs out. Ms. Bing said that she had heard of
only a few cases "where a kid is kept on a pro bono basis."
Ms. Bing first became interested in for-profit
psychiatric hospitals in 1985 when she worked in the adult and
adolescent unit in a for-profit hospital in the San Fernando Valley.
Her title there was "Mental Health Technician." The title, she said,
makes the work sound more glamorous than it is. "In actual fact what
you do is make sure patients get their meals, get to school, get to
group sessions, 12-step meetings. You also are available to search
rooms, and you're kind of like a guard."
After Ms. Bing finished Smoke, she decided to
write about the for-profit psychiatric hospitals. For 18 months, she
interviewed teenagers who had been placed in psychiatric facilities.
I asked if she found that many teenagers she
interviewed really did not belong in psychiatric institutions.
"I pretty much knew that when I worked at the
facility in 1985. Some did and some didn't. And the ones who didn't
said, 'I don't belong here.' My only advice to them could be and
was, 'It doesn't matter. This is their ride and you're on it.' So
what I told kids at that hospital was, 'Listen, whether or not you
belong here is beside the point; what you have to learn to do is
tell them what they want to hear. That's the only way out of here.
You have to learn, in other words, to kiss a little butt.' I did not
say, 'When your insurance runs out, you'll be out.' "
Ms. Bing came to the Christy Scheck story
through David Olmos's Los Angeles Times story about the Scheck vs.
Southwood settlement. Bing subsequently spent many months
interviewing the Schecks, their friends and neighbors, Christy's
teachers and therapist, the Schecks' lawyers and various
ex-employees of the now-defunct Southwood. National Medical
Enterprises executives consistently refused to speak with Ms. Bing.
I asked Ms. Bing what she suggests parents do when considering
placing their child in a psychiatric facility.
"I would certainly make sure that I
investigated the facility thoroughly and sat down for a face-to-face
with anyone who would be coming in contact with my child. I would
find out who owns that facility, who is the parent company, what is
their history, have there been any federal fines or awards for
malpractice. All of that is in the public domain. All this, of
course, is a lot of work. At a crisis point, it's often difficult to
stop and do this work. But, it's your kid."
The Schecks, she added, "were too frightened by
Christy's behavior and too concerned. And, remember, their therapist
had recommended Southwood."
I asked if a therapist's recommendation would
be sufficient for Ms. Bing.
"Would that be enough for me? Not now it
wouldn't. And frankly, it wouldn't have been enough for me in 1985
when I was working in such a facility. But then I was there, I was
seeing what was going on. If I had not worked in that facility, I
don't know. It would probably have been enough for me. Parents get
scared. They feel they're at a crisis point, and they could well be.
When you're in a crisis point, if blood is pouring out of a gash,
and someone says, 'Let's tie up that wound and you won't bleed to
death,' you're perhaps not going to investigate. You're likely to
turn that kid over to almost anyone with credentials. I don't say
this in a pejorative sense. Someone says, 'I can help you.' Parents
hope that's what will happen. If they're lucky, they get the right
kind of help. If they're not, as in the case of Christy Scheck, they
don't. I hope this book will make parents think two and three times
and do that arduous legwork."