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Unscrupulous Operators Bill Taxpayers for Bogus Clients; Florida Man's Death Costs Police, Jail $1 Million.

Aired July 31, 2013 - 11:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOHN BERMAN, CNN ANCHOR: Beth Karas, Courtney Pilchman, thank you so much for that.

Stay with us. We'll come back to you in a second.

We're going to talk about other top stories right now.

A story we brought you yesterday about a gay woman who refused to testify against her wife in a murder trial. Geneva Case wants spousal privilege and she and Bobbi Jo Clary entered into a civil union in Vermont. But Kentucky does not allow same-sex marriage and the judge could force Case to testify. The judge said in a hearing yesterday that she wants to hear from a former judge in Kentucky before she makes a decision.

A no-guilty plea this morning from Michael Madison. Police say Michael Madison killed three women and wrapped their bodies in plastic bags in east Cleveland, Ohio. He was indicted on Monday on murder and kidnapping charges. Bail is set at $6 million.

Coming up next here, part two of our "Keeping It Honest" series, clinical operators billing taxpayers for a bundle, and teenagers who don't need rehab at all. As you'll see, this is an investigation and it's getting results, next.

(COMMERCIAL BREAK)

BERMAN: A one-year investigation by CNN and the Center of Investigative Reporting is revealing widespread fraud in a program designed to help drug addicts. It's taxpayer-funded drug rehab in California, known as Drug Medi-Cal, which is part of the country's largest Medicaid program. Our investigation found that unscrupulous operators bill the government for bogus clients, and they often get away from it.

We uncovered how teens who live in group homes are used to milk the system, and how drug rehab centers investigated for fraud managed to stay in business.

Here's our investigative correspondent, Drew Griffin.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT (voice-over): Outside this drug rehab center in southern California, teenagers from a group home are dropped off. But according to former employees of the Pomona Alcohol and Drug Recovery Center, many of the teens they saw come here over the years didn't have substance abuse problems at all.

A one-year investigation by CNN and the Center for Investigative Reporting found that the drug Medi-Cal program in California, which cost taxpayers more than half a billion dollars over the last six fiscal years, is rife with fraud and plagued with weak government oversight.

Victoria Byers says she was driven in a van every week in a group home in southern California.

VICTORIA BYERS, WENT TO SO-CAL: We used to do drug tests and we were sent to these classes that would teach us not to do Ecstasy or not to do this drug or whatever.

GRIFFIN: But Byers, now 22 years old, thought it was strange because she didn't have a drug problem.

BYERS: I told them, why should I be here? I have no drug issue. But I had to go because all the other girls had to go and they couldn't leave me at the house by myself.

GRIFFIN: We obtained these documents showing where she signed her name. That's a requirement allowing rehab centers to bill the state. And signatures meant money. The more signatures, the more the Medi- Cal system reimbursed the clinic.

Michael Mergets remembers the trips to So-Cal services as well. Now in college, he said he was also driven in a van to a different group home.

(on camera): You never abused alcohol or prescription drugs or illicit drugs?

MICHAEL MERGETS, WENT TO SO-CAL: Not at all.

GRIFFIN: So all the time you spent there, three years, was a waste of your time and a waste of taxpayers' money?

MERGETS: Yes. Definitely.

GRIFFIN (voice-over): That doesn't surprise Tamara Scherer, a former manager and operator. She estimated that the teens didn't have a drug issue, so Medi-Cal made them up.

TAMARA SCHERER, FORMER MANAGER, SO-CAL ALCOHOL AND DRUG RECOVERY CENTER: It took a while to realize how deep a fraud was going on there.

GRIFFIN: Other whistleblowers came forward and claimed that So-Cal was committing fraud by labeling teens with fake addictions.

(on camera): Riverside County officials said they didn't have a reasonable way to prove So-Cal was making up addictions. But the county pulled the funds, anyway, because so many of its clients were dropping out. That forced So-Cal to shut down.

(voice-over): But the other clinic in Los Angeles County, accused of similar practices, remains open. Just last year, a county report on Pomona Alcohol and Drug Recovery Center found significant and serious insufficiencies in the program.

The operator of both clinics is a man named Tim Ajindu, who told the county his business is a pillar in our community. The fraud allegations? They came from disgruntled, fired, ex-employees.

Tim wouldn't tell us anything.

(on camera): I'm Drew Griffin with CNN.

TIM AJINDU, CLINIC OPERATOR: Who are you?

GRIFFIN: I just told you, I'm Drew Griffin with CNN.

(CROSSTALK)

GRIFFIN: Your former employees say you're billing for the county services you're not providing, sir.

(voice-over): Ajindu soon left without talking to us.

(on camera): Mr. Ajindu, if you have nothing to hide, why are you taking off?

GRIFFIN (voice-over): We found case after case of rehab centers, like Pomona, with a history of problems that are still allowed to keep billing the state.

Tamara Askew is a former counselor at Pride Health Services who claims she was told to bill for clients she didn't actually see.

(on camera): Did you have client lists?

TAMARA ASKEW, FORMER COUNSELOR AT PRIDE HEALTH SERVICES: I had a client list, yes. When I first got there, they gave me about 20 folders, 20 folders of clients that they had.

GRIFFIN: did you ever account for the 20 cases that you had in your folders?

ASKEW: Nope. I never could, because --

GRIFFIN: You couldn't find them?

ASKEW: Some were in jail. One was dead. A lot of --

GRIFFIN: Dead?

ASKEW: One was dead.

GRIFFIN: And still listed as a client.

ASKEW: Still a client.

GRIFFIN (voice-over): She said she confronted god Frey and Waginney, the operator of Pride.

ASKEW: I told Godfrey, look, I don't know how you expect me to bill for clients I don't have, and he said, how do you expect me to pay for these lights you have? She was then fired.

GRIFFIN: Do you feel it was throwing away taxpayers' money?

ASKEW: Yeah.

GRIFFIN: That was 2009. They have found other deficiencies uncovering evidence of ghost clients. Fraud documentation used for billing. A state auditor urged Pride be shut down. Not only did Pride stay open, it got even more Medi-Cal money, more than a million dollars in a year.

In its most recent investigation, brought on by yet another employee accusing Pride of billing for ghost clients, county investigators found the allegations unsubstantiated. They couldn't prove it. But they did find the operation extremely troubling, discovering missing paperwork, signed and dated medical waivers with no client information, and missing treatment plans. Despite that poor review, Pride is staying open.

If the county investigators couldn't find evidence of ghost patients, maybe they should do what we did. Go there on a Wednesday, when they are closed for treatment but apparently still billing. We saw no one entering the center on Wednesdays.

(on camera): We're going to go in.

GRIFFIN (voice-over): So we went in ourselves with hidden cameras.

(on camera): Do you have rehab going on today?

UNIDENTIFIED FEMALE: No. Mondays, Tuesdays, Thursdays and Fridays.

GRIFFIN: Mondays, Tuesdays, Thursdays and Fridays. Not Wednesdays?

UNIDENTIFIED FEMALE: No.

GRIFFIN: There is no group on Wednesdays. Today is Wednesday. There is no group today.

Even though it's closed for rehab, Pride has been billing for clients on Wednesdays, as these records show, including 60 on the day we went in with hidden cameras and found no clients there.

As for Ed Waginney, he told us two years ago that Pride accepted responsibility for deficiencies.

We went looking for Ed Waginney, seen in this police mug shot, related to do an arrest in 2003.

(on camera): Hi, CNN, how you doing? Is Godfrey in?

UNIDENTIFIED FEMALE: He's actually not here at the moment.

GRIFFIN: Pride counselor, Marquita Jones, denied any wrongdoing.

(on camera): We want to talk about an investigation we're doing on ghost clients, billing the state and county for treatment that's not happening. Do you know anything about that?

MARQUITA JONES, MANAGER, PRIDE HEALTH CARE: No, I don't. That's not going on at this office.

GRIFFIN: Godfrey has never asked you to sign a form saying all these patients come here?

JONES: No, sir, he did not.

GRIFFIN: And you do the counseling yourself?

JONES: Yes, I do, and I see live clients.

GRIFFIN (voice-over): As we waited for Godfrey and Waginney to show up, employees inside called police.

(on camera): They told us that their boss. We kind of camped out here waiting for them to show up.

(voice-over): Then abruptly shut down for the day.

(on camera): Did he call back and say he's not coming?

(voice-over): We never heard from anyone at Pride Health Services again.

(END VIDEOTAPE)

BERMAN: Drew's investigation continues tonight. You can watch "Rehab Racket" on "A.C. 360," at 8:00 eastern. You can also reach out by going to CNN.com/investigation.

A 30-year-old man has a stroke, spends hours in a jail cell without treatment and later dies. What took so long and who is to blame? Our legal panel weighs in, next.

(COMMERCIAL BREAK)

BERMAN: A Florida man's death has cost the sheriff's office and the jail medical provider a million dollars. Alan Daniel Hicks was arrested after his car crashed on the interstate. He had a stroke and was incoherent but police didn't realize that, and he was arrested for obstructing a police officer when he didn't follow commands of getting out of his car.

The booking video shows a man who is clearly in a medical condition on the floor. Instead of being given medical help, Hicks was left in his cell for 36 hours. When he was taken to a hospital, it was too late. Hicks was diagnosed with an ischemic stroke. He slipped back into a coma and died within three months.

CNN has reached out to parties involved but it has not been confirmed yet. We don't know if a new investigation has been launched but we did get a statement from Armor Correctional Health Services. It said, "Armor Correctional Health Services" applied nationally recognized medical guidelines for individual situations, diagnoses and incidents. Due to federal HIPAA regulations, we can't comment specifically on the patient's case, nor can we comment on the specifics of the settlement matter. Armor recognizes this is a very tragic incident. Armor's philosophy is the patient always comes first, and accordingly will continue to challenge itself and its processes."

Let's bring back our legal panel, Beth Karas, Courtney Pilchman.

Beth Karas, what does this say about the quality of medical care in jails? Armor Correctional Health Services is still holding a contract here. How is that?

BETH KARAS, CNN LEGAL CORRESPONDENT: It's so disturbing. This happened in May 2012, and the estate of Hicks filed this lawsuit against many defendants. Two so far have settled. Armor Correctional has settled for 800,000, and there's been another $200,000 payout by the sheriff's department, but there are still three defendants remaining and that's what we're talking about here. They haven't settled. Is this going to end up going to trial?

It's so disturbing that one of the officers on the scene admits that when this car, who had been called in as a possible drunk driver, was disabled on the side of the road and hicks was unresponsive, they thought he was drunk, they didn't smell any alcohol on him. He admits that. He actually had a stroke and was unable to move his left side and was incoherent. These officers and paramedics on the scene didn't detect this was a medical condition and he was thrown into a jail cell.

BERMAN: It does seem alarming.

Courtney, we weren't there so we didn't see it at that time, but that video is fairly alarming. It's surprising nobody realized this man was sick, having a stroke here. Do police officers get training on detecting sickness or strokes?

COURTNEY PILCHMAN, ATTORNEY: That's a great question, and when you conduct a dui investigation, there is a sheet you fill out, and one of the questions on a standard field sobriety dui sort of investigation, are you under the care of a doctor? Do you have any medical conditions?

And Beth is right, this is disturbing. One of the first things you see officers always testify to in dui trials is there is an odor of an alcoholic beverage. They smell something at first. If you see this poor gentleman incapacitated without any hint he was under the influence of any alcohol, you must get him to a hospital. It's ridiculous that paramedics couldn't figure it out. He's stuck on a jail cell on the floor. He's only able to use part of his body. It's a colossal screw-up by every professional that treated this gentleman. BERMAN: Courtney, do you think the people who arrested him, could they face charges?

PILSMAN: You know, probably not. If it's anything it's negligence or incompetence. It's nothing criminal. It's offensive. It's sad that this gentleman had to suffer the way he did for no reason. People are incapacitated while driving. For them to completely miss, it it's troubling.

BERMAN: He was held for 36 hours on the floor there clearly in major distress. If a person doesn't follow the commands of a police officer can he be held for over a day on those charges?

KARAS: It depends upon the jurisdiction and what's going on in the jail. We've never heard he was charged with anything. He didn't live so he was sent to a hospital within 36 hours. This calls into the question the privatization of our jails. There's a lot of positive reviews but a lot of negative ones from employees that have left the company. I don't want to dump too much on them. They have paid out their $800,000, their portion of the liability. Other people are being sued. People do question whether or not there would have been better treatment if the county was running the jail. Maybe not.

BERMAN: Tragic, tragic story.

Thank you so much. Appreciate it.

Remember New York's mayor wanting to ban oversize sodas? A new court ruling says it doesn't hold water. Cola or anything else.

(COMMERCIAL BREAK)

BERMAN: Police have a new tool for tracking criminals. They can trace your movements by following your cell phone use and they do not need a warrant to do it. A federal appeals court overturned a ruling that said data is protected by the fourth amendment. The U.S. Supreme court may take up this issue.

Big soda drinkers rejoice. When in New York, you can still by the biggest sugary drink you can find. An appellate court says Mayor Michael Bloomberg's attempt to limit those drinks to 16 ounces is illegal. The mayor says he will appeal. There was ban on extra large drinks to cut down on obesity.

Chuck Fox hasn't been on an easy journey, but defying the odds, he's reached his goal by living with cystic fibrosis.

In this week's "Human Factor," CNN chief medical correspondent, Dr. Sanjay Gupta, how he overcomes adversity simply by living each day.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Every day now Chuck FOX is beating the odds.

CHUCK FOX, HAS CYSTIC FIBROSIS: When I was born, the average life expectancy was 18 years old. Currently they estimate it to be 38 years old. Last year, I passed that.

GUPTA: When he was born chuck's parents were determined to see him thrive even though doctors said he may not survive.

FOX: I have to wear this mechanical vest to help keep my lungs clear and help me breathe. I get hooked up to that and it's basically like doing physical therapy for your chest and lungs.

GUPTA: He didn't allow the skepticism encourage his dreams of becoming a doctor and having family.

FOX: It made me want to do it more. Just prove I could do it.

GUPTA: That's exactly what he did. Dr. FOX graduated from Harvard Medical School and he's been a practicing for eight years. He and his wife just celebrated their 15th wedding anniversary and proud parents of 11-year-old twins, Sydney and Ben.

FOX: I would say I'm the luckiest person I know.

GUPTA: Dr. Sanjay Gupta.

(END VIDEOTAPE)

BERMAN: Make an appointment to watch Dr. Gupta.

Thanks for watching. I'm John Berman. AROUND THE WORLD starts after this break.

(COMMERCIAL BREAK)

ANNA COREN, CNN ANCHOR: More than 100,000 people have been killed since civil war broke out in Syria but the president is all smiles. Check out his new Instagram account.

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COREN: The Olympics are heading to Russia but there's criticism over how the country is handling the invitations.