A division of National Medical Enterprises will plead guilty to charges of Medicare fraud and conspiracy and pay a record fine of $362.7 million to settle a sweeping federal investigation, company officials said Tuesday. The settlement with the Santa Monica, Calif.-based hospital firm, expected to be announced Wednesday, surpasses any previous fine in a U.S. fraud case involving the health care or defense industries. One day earlier, a former Dallas executive for National Medical’ s psychiatric division admitted making at least $20 million in bribes to referring physicians and other health care professionals. Peter Alexis, former “administrator of the year” for Psychiatric Institutes of America, pleaded guilty to conspiracy and false-statement charges Monday before U.S. District Judge Joe Kendall in Dallas. Company spokeswoman Diana Takvam said the timing was coincidental and followed a preliminary settlement reached earlier this year. Under the settlement, National Medical’s psychiatric hospital subsidiary will plead guilty in Washington, D.C., to six counts of paying illegal kickbacks to gain referrals of Medicare patients and one count of conspiracy to make such payments.

A division of National Medical Enterprises will plead guilty to charges of Medicare fraud and conspiracy and pay a record fine of $362.7 million to settle a sweeping federal investigation, company officials said Tuesday. The settlement with the Santa Monica, Calif.-based hospital firm, expected to be announced Wednesday, surpasses any previous fine in a U.S. fraud case involving the health care or defense industries.

One day earlier, a former Dallas executive for National Medical’ s psychiatric division admitted making at least $20 million in bribes to referring physicians and other health care professionals. Peter Alexis, former “administrator of the year” for Psychiatric Institutes of America, pleaded guilty to conspiracy and false-statement charges Monday before U.S. District Judge Joe Kendall in Dallas.

Company spokeswoman Diana Takvam said the timing was coincidental and followed a preliminary settlement reached earlier this year. Under the settlement, National Medical’s psychiatric hospital subsidiary will plead guilty in Washington, D.C., to six counts of paying illegal kickbacks to gain referrals of Medicare patients and one count of conspiracy to make such payments.

Investigators have accused National Medical of accepting patients who did not need treatment and keeping them against their will until their insurance coverage ran out. Complaints from some of those patients over the last few years touched off federal and state prosecutions.

The federal charges cover bribes and kickbacks at six hospitals, in California, Colorado, Indiana, Missouri, Texas and New Jersey, from 1986 to 1991. The company said it also has agreed to pay an additional $16.3 million to resolve potential claims in 28 states, including Texas, where it operated psychiatric hospitals.

It expects to reach a final agreement in those cases within 30 days. More than 100 private lawsuits have been filed since 1991 against the hospital management company, alleging insurance fraud, overtreatment and malpractice.

In Texas, most of the private lawsuits involved patients at Brookhaven Psychiatric Pavilion in Farmers Branch, Psychiatric Institute of Fort Worth and Willowbrook Psychiatric Institute in Waxahachie. Those hospitals since have been sold, along with most of National Medical’s other 61 psychiatric hospitals. “This settlement will signify that NME is taking full responsibility for past conduct in certain of its businesses,” said Jeffrey C. Barbakow, brought in last year as president and chief executive to clean up the company’s problems.

The settlement – still subject to approval by a federal judge – would resolve all civil and criminal investigations of the hospital chain. The settlement includes $364.2 million in civil restitution and penalties, $33 million in criminal fines and $4.5 million in contributions to federally funded mental health programs. The agreement leaves open the possibility of criminal prosecution of current and former National Medical employees and doctors affiliated with the hospital operator.

In May, the company announced that it had reached a preliminary agreement with federal authorities and had set aside a reserve fund of $375 million to cover expected settlement costs. Prosecutors said this case provided the best window yet on misconduct in medicine. In the medical world, said Paul E. Coggins, the U.S. attorney in Dallas, “Practices that are illegal have been accepted and tolerated, very much akin to the climate that pervaded the savings and loans.” Oliver “Buck” Revell, special agent in charge of the Dallas FBI office, said federal investigators do not believe that the scandals involving National Medical and Psychiatric Institutes are isolated. “We believe there are others,” Mr. Revell said. “We will likely find similar problems in other major health-care institutions.

“People shouldn’t conclude that it’s only NME and that this is the end of the game. This is only the beginning of the process.” He said the FBI has been working with the U.S. Postal Inspection Service on a health-care fraud task force in Dallas for six months, along with investigators for the Department of Health and Human Services, the Defense Department and the Veterans Affairs Department. Mr. Revell noted that the continuing investigation is nationwide in scope. “What’s happening in Dallas is happening elsewhere,” Mr. Revell said. “We are really mounting a full-court press.” Federal officials have estimated that fraud swallows 10 percent of the nation’s health care expenses, or $80 billion to $100 billion a year. With savings and loan prosecutions winding down, the Clinton administration has made the policing of health care fraud a high priority.

The settlement was disclosed after the market closed Tuesday. The company’s shares closed up 1/2 at 151/2, on volume of 728,300 shares. The stock hit a low of 73/8 after last August’s raid by federal agents, but has gradually moved up since. To pay for the settlement, National Medical took a charge of $255 million in April to reflect the after-tax effect. As a result, it posted a fiscal third-quarter loss of $164.3 million, or 99 cents a share, compared with net income of $54.2 million, or 33 cents, for the year-earlier quarter. Contributing to this report were The Los Angeles Times, The New York Times and Bloomberg Business News.

US District Court Judge Joe Kendall leveled his gaze at Peter Alexis. 'So it was just a massive kickback operation?' Alexis, a former VP of Psychiatric Institutes of America, a subsidiary of National Medical Enterprises (NME), answered in the affirmative. 'Yes, Your Honor.' 'Were you buying patients?' Judge Kendall continued. Again, the same response. 'Yes, Your Honor.' Patients like Sherry, who as a young teenager in 1987, was referred to NME's Brookhaven Psychiatric Pavilion in Dallas for evaluation of a possible chemical imbalance, were among the untold number of children who were put in psychiatric hospitals not because of any medical need, but because NME was bribing doctors to hospitalize kids that had good insurance. Sherry's insurance was so good that she spent 422 days locked inside what some insiders described as a "clinical rat hole."

US District Court Judge Joe Kendall leveled his gaze at Peter Alexis. 'So it was just a massive kickback operation?'  Alexis, a former VP of Psychiatric Institutes of America, a subsidiary of National Medical Enterprises (NME), answered in the affirmative. 

'Yes, Your Honor.'

'Were you buying patients?' Judge Kendall continued. Again, the same response. 

'Yes, Your Honor.' 

Patients like Sherry, who as a young teenager in 1987, was referred to NME's Brookhaven Psychiatric Pavilion in Dallas for evaluation of a possible chemical imbalance, were among the untold number of children who were put in psychiatric hospitals not because of any medical need, but because NME was bribing doctors to hospitalize kids that had good insurance. 

Sherry's insurance was so good that she spent 422 days locked inside what some insiders described as a "clinical rat hole."

How did this happen in America?

 Richard Eamer, former CEO of NME, found a niche in the healthcare market at a time when the government was otherwise tightening-up oversight of Medicare payments to hospitals.  While payments to general hospitals were being scrutinized, it appeared there were virtually no cost-control measures in place for psychiatric facilities.

NME quickly bought-up facilities around the country and set its plan in motion. Patients at NME facilities became a commodity, and company executives employed any means necessary to get patients into their facilities.  Lucrative "consulting" contracts were given to doctors who would be more than happy to refer patients to NME, without regard for whether they needed to be hospitalized.  These cooperative doctors were essential to NME's scheme, and they were monitored closely and highly motivated.    To disguise payments for their referrals, NME signed personal service contracts with the doctors and kept track of patient admissions, length of stay, and revenue generated by referred patients.  NME also plied the doctors with lengthy six figure practice guaranties, payments for office expenses and annual stipends for accepting figurehead roles in their hospitals. 

The financial motives of the company led to a dangerous shift in the way patients were cared for.  Treatment and healing were no longer the main goals at NME.  These had been replaced by one simple, perverse objective: fill beds at any cost.

The real victims find a champion of their rights.

It was not until 1993, when 600 federal agents raided 20 NME facilities, that the public became aware of what was really going on at the company.  NME -- at its peak a multi billion-dollar empire with more than 100 hospitals across four continents -- was involved in one of the largest healthcare-related frauds in history.  Following the raid on its facilities, NME paid the government $379 million in criminal fines, civil damages and penalties, making it one of the largest False Claims Act settlements in history.

Although the government secured its fines and the insurance companies that paid for the unlawful hospitalizations recovered some of their money, civil lawyers had largely ignored the former patients' rights.  That is, until Tommy Fibich approached Jim Moriarty about three children who had undergone a harrowing experience at one of NME's psychiatric hospitals outside of Houston, Texas.   Thereafter, Fibich and Moriarty joined forces with Steve Hackerman of the Bristow Hackerman Wilson & Peterson firm in an effort to seek justice for the real victims of NME's scam - the former patients.

The legal team screened thousands of cases before filing suit on behalf of approximately 600 former NME patients, most of whom were children when they were hospitalized following a "free screening" for ADD or similar marketing ploy.  The "free screenings" were little more than a cleverly designed way to x-ray a prospective patient's wallet for insurance coverage.

After settling in on their client group, the lawyers brought Pat Green, a prominent lawyer from Montgomery County Texas into the group, and proceeded to file suit against NME and its affiliated companies, including 11 hospitals and more than 80 doctors and psychologists.  The legal team recruited experts from around the country to testify on behalf of the children.  Doctors like Bruce Perry, a world-renowned expert on children in crisis, who at the time was Chief of Psychiatry for Texas Children's Hospital in Houston.

Central to the legal team's strategy was a willingness to stand up, fight, and take the defendants head on, for any and all challenges thrown at them.  Events early on set the tone for what turned out to be a lengthy and acrimonious legal fight.  Soon after the case was filed, NME's lawyers, believing the Plaintiffs would back down, sent deposition subpoenas to take four different plaintiff's depositions per day every day for weeks on end beginning approximately one month later.  Coordinating an event like that would take a monumental effort and considerable teamwork and expense given the number of parties involved. 

The Plaintiffs' legal team waited to respond to these subpoenas until the Friday before the depositions were scheduled to begin.  The response was both simple and powerful: Every one of the plaintiffs would appear for the depositions as subpoenaed on the dates and times indicated.

The following Monday morning, NME's lawyers appeared from all over the country unprepared to carry out the challenge they believed would never be answered.  The depositions went on for six weeks before NME decided it had seen enough. Ultimately, after years of battling at the courthouse, painstaking review of hundreds of thousands of internal documents and dozens of depositions doctors, psychiatrists and company executives, NME caved on the eve of the first case set for trial and agreed to settle all of the claims for a confidential amount. 


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"We have brought the world together as far as we can politically. To bring about a true world government, the world must be brought together spiritually. What we need is a United Nations of Religions.” Robert Muller – Former Assistant Secretary General at the UN

"We have brought the world together as far as we can politically. To bring about a true world government, the world must be brought together spiritually. What we need is a United Nations of Religions.”        

                  Robert Muller – Former Assistant Secretary General at the UN  

  Robert Muller understood that the ultimate goal of internationalists around the globe is a totally implemented world governing system—an organization designed to supersede any national government and demand that all nations surrender their sovereignty and submit to international laws and regulations. Mr. Muller also knew that for this dream to become a reality, all religions must somehow ignore their differences, unify and pledge their allegiances to the establishment of the global community. When this happens—and according to Bible prophecy it will in the very near future—those who choose not to conform will be considered heretics and possibly even pay for it with their lives.  

  Revelation 13 prophesies that just this kind of a world governing system will be established and ruled by the Antichrist. The same chapter foretells of the world religion and global economic system that will be used to enforce the edicts of the Antichrist and cause the entire world to pledge allegiance to his global authoritarian system.   

  We are, in many ways, already functioning under the tentacles of an ever-encroaching global governing system. Have you ever heard of the World Health Organization, International Monetary Fund, World Trade Organization or the United Nations? These entities and many more were designed for nothing other than to govern the entire planet.   

  Just as obvious is the establishment of the electronic monetary system that will be used to economically sanction individuals in order to force them to conform to the Antichrist’s global governance standards. The Bible prophesies that, in the end time, every person on earth will be given their own unique identification number, and without it they will not be able to buy or sell. It is no coincidence that over half of the world’s population has already been issued a national ID card, which must be used to function in their particular countries. This is nothing more than a precursor to the Mark of the Beast system prophesied in Revelation 13:16-18.   

  So what is the status of the one-world religion? What steps have already been taken, where are we now, and how will we recognize it in the future?   

  Over the last twelve months, we have seen major efforts by the Vatican to build a bridge between Catholics and multiple religious leaders around the world. And with great success! It is the continuation of a decades-old attempt to gather all religions into an all-inclusive global religious community, and it is in the last stages of development. The question is not will a one-world religion be formed, but how close are we to its culmination?  

  Revelation 13 is devoted specifically to end time events. Verses 1-8 describe the one-world government, 11-14 focus on the one-world religion along with the False Prophet and 16-18 outline the Antichrist’s global economic system.   

  The goal of the Antichrist will be to lord over this global government and to force every human to pledge allegiance to him or to actually “worship” him.   

  “And all that dwell upon the earth shall worship him, whose names are not written in the book of life of the Lamb slain from the foundation of the world.” – Revelation 13:8   

  In order for this to be fully realized, the Bible says the Antichrist will have two methods of enforcement: 1) He will form an alliance with the largest religious organization in the world—Christianity, and with the leader of the one-world religion—the False Prophet. The penalty for non-conformity with the one-world religion will be death, according to Revelation 13:15; “And he had power to give life unto the image of the beast, that the image of the beast should both speak, and cause that as many as would not worship the image of the beast should be killed.” 2) He will implement a system of economic control upon the human race—more commonly known as the Mark of the Beast. Those who will not participate in this system will not be able to buy or sell, rendering themselves unable to function in society.   

  To economically sanction an individual will surely sting. However, to murder under the guise of Christianity those who will not comply sounds incomprehensible—that is until you consider that there are world leaders who have already proposed this exact course of action!  

  In 1893, the first Parliament of the World’s Religions was held in Chicago. Its stated goal was to cultivate harmony among the world’s religions and spiritual communities and foster their engagement with the world and its guiding institutions in order to achieve a just, peaceful and sustainable world. Actually, it was way ahead of its time because not much else happened on Interfaithism for 80 years or so.  

  In 1998, Bishop Swing held the second charter writing conference at Stanford University in California. In attendance were Catholics, Protestants, Jews, Hindus, indigenous people and Wiccans. The charter was finally completed and the United Religions was officially born in June of the year 2000.  

  Interfaithism actually realizes there are two major religions on the earth, Islam and Christianity. Islam claims about 1.57 billion followers, which is 23% of the world’s population. Christianity claims 2.2 billion followers, which is 33% of the world’s population. Together, between Islam and Christianity, you have 56% of the world’s population. The interfaithists say, if these two religions could form an alliance together, they could bring the entire world together.   

  With the goal of a world government in mind, Interfaithism is the mechanism being used by the global elite to unite all religions of the world. 


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Let’s explore the myth that psychiatric conditions aren’t as well defined as other medical diseases and psychiatric treatments aren’t supported by as much scientific evidence, and don’t work as well, as other medical treatments. Even my fellow psychiatrists believe this. I’ll take broken limbs and that sort of thing out of the equation and go on from there. Are psychiatric conditions nothing more than labels for normal behaviors? Is a person with social anxiety disorder just a shy person? Is depression just an experience we all have to live with during hard times? What makes a super-punctilious person a case of obsessive-compulsive disorder? It’s true that some psychiatric conditions exist on a continuum with normal reactions, normal states of being. Differentiating them from normal is no different than deciding what level of blood pressure is ‘hypertension,’ how many pounds add up to ‘obesity,’ or how many hours of labor it should take before a baby is born. A condition rises to the level of disease when it handicaps a person, is associated with bad outcomes, and/or can be treated — in psychiatry just as in the rest of medicine.

Let’s explore the myth that psychiatric conditions aren’t as well defined as other medical diseases and psychiatric treatments aren’t supported by as much scientific evidence, and don’t work as well, as other medical treatments. Even my fellow psychiatrists believe this. I’ll take broken limbs and that sort of thing out of the equation and go on from there.

Are psychiatric conditions nothing more than labels for normal behaviors? Is a person with social anxiety disorder just a shy person? Is depression just an experience we all have to live with during hard times? What makes a super-punctilious person a case of obsessive-compulsive disorder? It’s true that some psychiatric conditions exist on a continuum with normal reactions, normal states of being. Differentiating them from normal is no different than deciding what level of blood pressure is ‘hypertension,’ how many pounds add up to ‘obesity,’ or how many hours of labor it should take before a baby is born. A condition rises to the level of disease when it handicaps a person, is associated with bad outcomes, and/or can be treated — in psychiatry just as in the rest of medicine.

Do we know more about what causes other diseases than we do about the causes of psychiatric illnesses? Let’s take juvenile diabetes. We all know that diabetes is caused by the failure of the pancreas to secrete normal amounts of insulin. But what causes that? We say it’s an autoimmune condition — the body attacks its own insulin-secreting cells. Why does that happen? We don’t know. We do know a lot about the causes of psychiatric conditions. Several of them have a strong hereditary component — they run in families. Certain kinds of childhood experiences and later traumas have an effect. Sometimes people with certain genes can become ill only under certain circumstances.

Are psychiatric illnesses not real because there are no diagnostic tests for psychiatry? The substrate, the physical location, of thought, mood, and behavior, is the brain. That’s not a part of the body we like to biopsy without an extremely good reason. The consistency of the brain is something like Jell-O — not easy to use an x-ray to see where it’s broken. Using brain scans, however, we now can distinguish between the brain of a person with depression and a person who is not depressed — and make many, many other such observations. Those observations correlate with what we learn by interviewing a patient and observing his or her behaviors.

Do psychiatrists want to label everybody as sick so as to fill our practices? There is a shortage of psychiatrists. I don’t know any psychiatrists with time on their hands. Our incomes are at the lower end of the medical totem pole, along with family medicine and pediatrics, which makes it difficult to repay the over $100,000 in student loans we have, on average, but we make a good living.

How can talking to someone cure a real disease? Well, it can. It can also help cancer patients to live longer; it can lessen the pain of diseases and procedures. We see the same changes on brain images whether a person’s depression is relieved by psychotherapy or medication.

Do psychiatric medications turn people into ‘zombies,’ or change their personalities? Any medication can cause ill effects in some people, especially if they take too large a dose. Are psychiatric medications ‘brain-altering’? A person who recovers from depression, post-traumatic stress disorder, or obsessive-compulsive disorder can seem to have a changed personality — a healthy one. People treated for schizophrenia can use their brains to make contributions to society and have fulfilling lives because their brains are no longer cluttered with hallucinations and delusions.

Prejudice against psychiatry, psychiatric patients, and psychiatrists goes back millennia. It’s hard enough to have a painful and possibly disabling disorder, or to treat one, without suffering from stigma as well. The brain is not only the most complicated organ of the body — it’s one of the most complicated entities in the universe. So psychiatric problems don’t have simple answers. Just like our colleagues in other branches of medicine, no more and no less, there is much more that we don’t know than that we do know. Like our medical colleagues, we’ll keep relieving the suffering of people who are ill, and we’ll keep doing research to understand and treat them ever better. 


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