- The Washington Times - Saturday, February 18, 2006

One of the District’s largest mental health organizations has gone bankrupt, but the nonprofit company cannot account for how it spent all of its funds because city investigators have taken possession of its financial records.

The Center for Mental Health Inc. disclosed in bankruptcy filings last week that it owes more than $2 million to creditors, including nearly $500,000 to the company’s chief executive officer and more than $650,000 to the District’s Medicaid agency.

The company also stated that it cannot document its expenditures in the months leading up to its bankruptcy filing last month because the D.C. Office of the Inspector General has those records. The Center for Mental Health has shut down because of the fiscal collapse.

The Inspector General’s Office has declined to comment on the bankruptcy filing other than to confirm an investigation of the organization.

A spokesman for the U.S. Attorney’s Office says federal authorities also are involved in the investigation.

The D.C. Medical Assistance Administration, the division of the D.C. Department of Health that administers Medicaid, says it has uncovered evidence of improper billing by the organization.

Health department spokeswoman Leila Abrar says an audit found that the Center for Mental Health was billing for “services that were not medically necessary and therefore not reimbursable by Medicaid.”

Dr. Johanna Ferman, the center’s chief executive, disputes the District’s findings.

She says most of the Medicaid debt stemmed from a $400,000 cash advance the center received from the city years ago. “These were absolutely, medically necessary services,” she says.

Dr. Ferman says the center has agreed to pay $654,000 after reaching a deal with city officials for 10-year repayment plan.

Dr. Ferman says neither she nor other company officials know what the inspector general is reviewing, but adds that the center has complied with document requests.

She also says no funds were misspent. Dr. Ferman blames the D.C. government for the center’s closure. “Rather than coming together and fixing this, it became a highly politicized situation,” she said.

Dr. Ferman is one of the largest creditors in the bankruptcy case.

According to filings this week in U.S. Bankruptcy Court in the District, the center owes her $496,184. She says the debt stemmed from deferred salary and pension payments. She earned $185,000 per year, records show.

D.C. officials expressed concerns about the center’s operations as it neared collapse last fall, including whether it had improperly billed Medicaid for child care services.

Council member David A. Catania, at-large independent and chairman of the Health Committee, said at a hearing last year that the District found $500,000 to keep the company from closing. But he was skeptical when council member Marion Barry, Ward 8 Democrat, proposed another $3 million bailout in October.

Mayor Anthony A. Williams, a Democrat, also questioned the bailout.

A spokeswoman for the D.C. Department of Mental Health says hundreds of the center’s former clients, who mostly live east of the Anacostia River, have found services with other providers.

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