SANTA MONICA, Calif. -- National Medical Enterprises Inc. said Tuesday it has settled 59 patient care lawsuits against seven of its Texas psychiatric hospitals for approximately $15 million.
The settlement by the troubled hospital chain will be distributed to 66 plaintiffs, including seven additional cases involving minors.
NME, of Santa Monica, Calif., has been dogged for several years by persistent problems and government probes at its psychiatric hospitals. It installed new management last summer and has been trying to resolve a wide variety of legal issues.
It announced last month it had increased its litigation reserve by $250 million for settling lawsuits with insurance companies after agreeing to a settlement for up to $125 million to take care of two suits by 19 insurers, who had alleged widespread fraud at NME's psychiatric hospitals.
NME said the plaintiffs were represented primarily by Robert Andrews of Fort Worth, Texas and the suits had been filed either in state court in Tarrant County or in U.S. District Court in Fort Worth.
The hospitals included Brookhaven Pavillion in Dallas; Psychiatric Institute of Fort Worth; Willowbrook Hospital, of Waxahachie; Twin Lakes Hospital, of Denton; Laurelwood Hospital, of Houston; Baywood Hospital, of Webster; and Beford Meadows Hospital, of Bedford.
Baywood Hospital is the only facility that is still operated by NME. the others have been closed or sold.
'As a company which has had a solid reputation for patient care, the allegations in these cases have been damaging to NME's reputation,' said Christi R. Sulzbach, associate general counsel and senior vice president, public affairs. 'These settlements represent our acknowledgement that we had to resolve these cases before we could regain the public's trust.'
She said the 66 cases represent approximately half of the psychiatric patient care cases which contain allegations of conspiracy or fraud.
The cost of the settlements is included in the $250 million litigtion reserve NME has established. 'Today's news represents another step in our determined effort to resolve these issues and restore our reputation,' Sulzbach said.
Earlier this month, another of NME's Texas psychiatric hospitals agreed to pay $2 million to settle charges it violated federal regulations. Colonial Hills Hospital in San Antonio agreed with federal prosecutors to plead guilty to two counts of violating the Civilian Health and Medical Program for the Uniformed Services (CHAMPUS).
The hospital, which closed in May 1992, agreed to plead guilty to presenting a false claim in December 1989 regarding a physician not having a CHAMPUS provider number and to the hospital's making a false statement in an emergency admission letter submitted to CHAMPUS in December 1990.
NME is still facing a third insurance industry suit, filed last year in Washington DC, that also makes similar allegations to the two settled suits and involves 13 insurers as plaintiffs. It also faces shareholder suits and psychiatric malpractice cases.
NME disclosed last spring that its two psychiatric hospitals in Missouri were under investigation by two federal grand juries. The company's headquarters in Santa Monica, Calif., was raided by federal agents on Aug. 26 at its headquarters, along with more than 20 of its facilities.
The fraud accusations first surfaced two years ago at psyhciatric facilities in Florida, Texas and New Jersey, with the Texas probe resulting in a $9 million settlement in June 1992.
NME has claimed in the past that its problems at its psychiatric hospitals were due to overzealous local administrators and were isolated instances. But reports have emerged that the federal government is seeking evidence linking suspected criminal misconduct by NME hospitals with company policies.
