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Whistleblowers Sue UHS for Defrauding the State of Special Education Money
Acting as whistleblowers, former employees, a student and a parent have brought suit against Universal Health Services (NYSE: UHS, www.uhsinc.com) under the California False Claims Act. UHS operates UHS Schools (www.uhsschools.com), a for-profit system of California non-public schools serving children with disabilities and funded entirely by public education dollars. Plaintiffs sue as private attorneys general for the State, charging UHS with fraud. They are witnesses to UHS' exploitative practices, which include falsifying records, charging for students not present, understaffing its classrooms, employing uncertified teachers, and evading state oversight efforts designed to prevent such abuses.
Local educational authorities place California public school students with disabilities in a UHS school. For a large fee paid with education tax dollars-perhaps more than $44,000 per student per year-UHS promises to render special education services. Thus UHS receives millions of tax dollars each year to provide special education services to which California disabled children are entitled. But children with disabilities, California's most vulnerable citizens, receive only a fraction of the educational benefits that UHS promises and that the state pays for.
In the past five years, UHS has operated schools in Carmichael, Cotati, Elmira, Grand Terrace, Hemet, Morongo Valley, Rancho Cucamonga, Riverside, San Rafael, Santa Rosa, Steele Canyon, Vallejo, Ventura, and Victorville. UHS is a Fortune 500 company. In 2008, it generated revenues of over five billion dollars.
The complaint alleges that UHS, its agents and affiliates, unlawfully requested reimbursement from the State of California through the various local education authorities (e.g., SELPAs) with which it had contracted to provide special education services. UHS agreed (and was paid) to assume the responsibility to provide a free, appropriate public education to hundreds of public school children with disabilities. However, UHS often made false claims about student attendance as well as the educational instruction, services and supplies it provided. In the lawsuit, plaintiffs contend that UHS knowingly submitted billing records that did not accurately reflect that some UHS personnel were unqualified to render instructional services, requested reimbursement for services not actually provided to the students and overcharged for services they did provide. Plaintiffs also allege that UHS staff routinely subjected students to unnecessary or unlawful restraints, seclusion, and other improper discipline.
The lawsuit was filed under seal on May 18, 2009, to permit the State to investigate. The investigation having been completed, the Court unsealed the Complaint on April 1, 2010. Service was effectuated on Defendants on April 8. Defendants’ challenge to the sufficiency of the Complaint will be heard in Sacramento Superior Court on October 15, 2010.
A copy of the First Amended Complaint is attached or available at www.sorgen.net. For more information, please contact the Law Offices of Michael S. Sorgen, (415) 956-1360.
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