The Justice Department announced today that Allegiance Health Management and four hospitals it managed, including one in North Little Rock, would pay $1.7 million to settle a lawsuit over excessive charges to Medicare for mental health services.

The settlement covers Allegiance, based in Shreveport, and four hospitals, two in Texas, one in Louisiana and North Metro Medical Center in North Little Rock. A news release said:

Beginning in 2005, Allegiance entered into arrangements with numerous hospitals located throughout the Southeastern United States to provide Intensive Outpatient Psychotherapy (IOP) services to patients on the hospitals’ behalf. At each of these hospitals, Allegiance established an Inspirations Outpatient Counseling Center at which Allegiance employees and those acting under the direction and control of Allegiance were responsible for, among other things, identifying potential patients, creating patient treatment plans, and performing IOP services. This settlement resolves allegations that at each of the Inspirations Outpatient Counseling Centers, Allegiance provided IOP services to Medicare beneficiaries that did not qualify for Medicare reimbursement because: 1) the patients’ medical condition(s) did not necessitate IOP treatment; 2) the patients’ treatments were not provided pursuant to an individualized treatment plan designed to help individual patients address specific mental health needs and reach achievable goals; 3) the patients’ progress was not being adequately tracked or documented; 4) the patients received an inappropriate level of treatment; or 5) the therapy provided was primarily recreational or diversional in nature, and was not therapeutic. 

The settlement arises from a civil lawsuit filed by a former Allegiance employee who’ll receive $300,000 as a whistleblower.

Here’s the government’s full release.