Acacia Mental Health Clinic, LLC and Its Owner, Abraham Freund, Agree to Pay Over $4 million in Cash and Other Compensation to Settle the Government’s False Claims Act Lawsuit

United States Attorney Matthew D. Krueger of the Eastern District of Wisconsin announced today that Acacia Mental Health Clinic, LLC (“Acacia”) and its owner, Abraham Freund, have agreed to pay approximately $4.1 million in cash and other compensation to the United States and the State of Wisconsin.  The payments will be made to settle the government’s lawsuit alleging that Acacia and Freund violated the False Claims Act by submitting thousands of false claims to Medicaid for urine drug tests and telemedicine services.  Acacia and Abraham Freund also agreed to 20-year suspensions from participation in federal healthcare programs such as Medicare and Medicaid; Abraham Freund’s son, Isaac Freund, agreed to a 5-year suspension.

Acacia operated a mental health and drug dependency clinic in Milwaukee, Wisconsin, until it ceased operations following the government’s filing of its lawsuit.  Abraham Freund was the owner and chief executive of Acacia.  Isaac Freund was involved in the operations of Acacia.  The government alleged that Acacia, at Abraham Freund’s direction, submitted thousands of false claims to Medicaid in three fraudulent schemes:

    From January 1, 2011, through October 31, 2012, Acacia and Abraham Freund lied to Medicaid about the type of urine drug screens performed at Acacia in order to obtain additional Medicaid reimbursement to which they were not entitled.  Acacia, at Abraham Freund’s direction, purchased inexpensive, simple “cup” tests for approximately $5 per cup, but then billed Medicaid as if Acacia had performed sophisticated tests that required laboratory equipment that Acacia did not possess.  Acacia thus received over $200 per test instead of the $20 to which it was actually entitled.

    

    From November 1, 2012, through December 31, 2014, Acacia, at Abraham Freund’s direction and with Isaac’s involvement, performed medically unnecessary and duplicative urine drug tests for its Medicaid patients to obtain increased reimbursement.  During this period, Abraham Freund required nearly every Medicaid patient to receive a cup test as well additional tests performed on multiple laboratory analyzers.  Acacia and Abraham Freund knew that these duplicative tests served no medical purpose and billed Medicaid for these tests solely to obtain additional Medicaid money.

    From June 1, 2011, through December 31, 2014, Acacia, at Freund’s direction, submitted claims to Medicaid for telemedicine services rendered to Acacia’s patients by psychiatrists located outside the United States, in violation of Medicaid regulations. 

“As a Medicaid provider purporting to treat patients suffering from mental health and drug dependency issues, Acacia saw some of the neediest patients in our state.  Rather than treat them in good faith, Acacia and Abraham Freund exploited these patients as a means to bill Medicaid for unnecessary services to increase revenue,” stated United States Attorney Krueger.  “This settlement will help make Medicaid whole, while also ensuring that Acacia, Abraham Freund, and Isaac Freund cannot submit more false claims to any federal healthcare program in the future.”

“Medicaid providers cannot misrepresent the services they provide in order to increase their billings,” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General – Chicago Region (“HHS OIG”).  “This settlement includes voluntary exclusions of Acacia, Abraham Freund, and Isaac Freund to ensure that they do not bill federal healthcare programs for misrepresented and unnecessary services in the future.  The OIG will continue to work with our federal, state and local partners to protect the health and safety of Medicaid patients and vital taxpayer dollars.”

“The Federal Bureau of Investigation prioritizes the protection of taxpayers and will continue to hold accountable healthcare providers who misuse the Medicaid program,” said FBI Acting Special Agent-in-Charge Michelle Sutphin. “This multi-million dollar settlement and the exclusions of Acacia, Abraham Freund, and Isaac Freund from future participation in Medicaid show that the FBI will work to remedy and prevent Medicaid fraud.”

The government’s lawsuit followed a whistleblower lawsuit filed by Rose Presser under the qui tam provisions of the False Claims Act.  Consequently, Ms. Presser will recover a share of the settlement amount.  

Assistant United States Attorney Michael Carter represented the government in this matter.  The FBI, HHS OIG, and the Wisconsin Department of Justice Medicaid Fraud Control & Elder Abuse Unit assisted in the investigation.  The settlement agreement states allegations only; the defendants do not admit liability for the allegations.