The psychiatric care provided to children and teens sent to residential treatment facilities operated by Austin-based Youth and Family Centered Services was far from touchy feely. According to litigation filed by attorneys at Fish & Richardson, along with the U.S. Department of Justice, the experience for many troubled young clients at these facilities was marked by woefully inadequate staffing and dangerous physical restraints. To top it off, YFCS billed the Medicaid system for reimbursement for treatment that has since been described as inadequate or worthless.

On Thursday, YFCS and its subsidiary Southwood Psychiatric Hospital settled the lawsuit, agreeing to pay $150,000 to reimburse Medicaid and implement comprehensive new treatment standards and adhere to increased governmental oversight of its programs. Among other things, the for-profit company, which operates 13 residential psychiatric facilities across the nation for children aged 6 to 18, will hire two full-time compliance officers to ensure its programs are operating lawfully.

This settlement marks the first resolution by the Justice Department of a failure of care case against residential psychiatric treatment facilities in Pennsylvania.

Fish & Richardson represented Dr. Stefan P. Kruszewski, a board-certified psychiatrist who had discovered and exposed the fraud and abuse, but was then fired from his position as a medical consultant for the Bureau of Program Integrity in Pennsylvania's Department of Public Welfare. Because the Medicaid payments were administered through a joint federal/state Medicaid program, the U.S. government intervened in the case and became a party to the lawsuit and settlement agreement. The federal government has reserved the right to bring criminal charges and to exclude YFCS from Medicaid reimbursement programs in the future.

"This was a case of the exploitation of children for profit," said Thomas Melsheimer, a principal of Fish & Richardson in the firm's Dallas office, who, along with Thomas Halkowski, a principal in Fish's Wilmington, Del. office, represented Dr. Kruszewski in the case. "Dr. Kruszewski should be commended for having the courage to come forward to protect this vulnerable group from further mistreatment. Because of his actions, we now have an agreement that provides a new standard of care to help safeguard the well-being of the thousands of children who are housed in YFCS's facilities."