On paper, the National Association for Behavioral Health looked like a thousand other trade groups that can be found in Washington.
The obscure group had an address on Pennsylvania Avenue just blocks from the White House, cultivated high-profile relationships with key lawmakers, spent hundreds of thousands of dollars on top-notch lobbyists and even held fundraisers for candidates and incumbents friendly to its position on policy issues.
But all was not as it appeared with the organization, according to law-enforcement officials.
The Justice Department called the NABH “a legitimate-looking vehicle” that was essentially controlled by Lawrence Duran, a Miami businessman who pleaded guilty earlier this year to 38 counts of health care fraud, conspiracy and money laundering. Duran was the pivotal figure in a long-running criminal scheme that bilked the Medicare program out of $87 million, but his efforts to influence Washington and play the lobbying game were only recently revealed in a slew of court documents released last month.
Duran and dozens of alleged co-conspirators — some whom are still under investigation — billed Medicare for emergency mental-health treatments that didn’t take place, were ineffective or unnecessary, prosecutors said. Prosecutors also allege that Duran set up the NABH as a trade association to keep the Medicare money flowing. They claim Duran controlled the association’s staff, devised its lobbying strategy and helped initiate those efforts.
Duran was sentenced last month by a federal judge to a 50-year term behind bars, the harshest sentence ever handed out for a Medicare scam. Duran, who is already in prison, is appealing that ruling.
As part of their push for a stiff sentence for Duran, federal prosecutors released internal documents from the NABH.
All told, the NABH spent $620,000 on D.C. lobbying and law firms like Patton Boggs, Alston & Bird and Polsinelli & Shughart to push its position on Medicare reimbursement to lawmakers and federal officials, according to lobbying disclosure reports.
Some of these lobbyist payments even continued after the DoJ and the Health and Human Services Department’s inspector general’s office began investigating Duran and his associates on Medicare fraud allegations.
The NABH itself reported shelling out $150,000 on lobbying in 2010, although that may overlap with what the lobbying firms disclosed.
Some of these same lobbyists are still sticking by their client.
“We strongly commend [the] DoJ for ferreting out Lawrence Duran’s criminal activity,” Harry Sporidis of Polsinelli & Shughart said in an email to POLITICO. “In fact, [the] NABH has been a staunch proponent for [the Centers for Medicare & Medicaid Services] to develop conditions of participation to promote the oversight of Community Mental Health Centers and that has entailed much of our work.”
Sporidis and his colleague Tim Perrin first began working for the NABH in early 2010 and have billed $300,000 since then, lobbying reports show. Sporidis and Perrin, along with the firm’s Edda Collins Coleman, are still registered to lobby for the organization.
Sporidis said in his email that he and his colleagues “had very little interaction with Mr. Duran, as he resigned from [the] NABH shortly after we were engaged to do work with [the] NABH.”
While Sporidis maintains that the NABH is a legitimate group, its current status is unclear. No trace of the NABH can be found at either of two Washington, D.C., addresses it used. The NABH’s website was recently taken down, and its phone number now rings through to a locksmith service. The NABH terminated its in-house lobbying arm in March, and its one lobbyist, Meredith Dyer, now works for The Endocrine Society.
Donna Newchurch, who runs a Baton Rouge, La., consulting firm, was listed as executive director on the NABH’s website and on emails submitted by prosecutors in Duran’s criminal case. Newchurch, though, said in an email that “we have not done any work for the organization” since 2010.
Tom Scully, the former head of the Centers for Medicare & Medicaid Services, the government agency that oversees the programs, now leads Alston & Bird’s health care practice. Scully was listed as a lobbyist on the NABH account, along with Jennifer Bell, a former aide to Sen. John Thune (R-S.D.) and Colin Roskey, a former Senate Finance Committee health policy adviser.
Alston & Bird started working for the NABH in April 2008, and it billed $200,000 for its work, disclosure reports show.
Scully told POLITICO that he never actually worked on improving the “reimbursement and regulation of Medicare and Medicaid programs for community health centers” as the firm stated in its lobbying reports on NABH-related work.
“I did no work for them,” Scully insisted.
Further, Scully claimed the NABH did not pay the full $200,000 it owed to his firm. Alston & Bird terminated the NABH as a client in July 2009.
“If they had ever paid a bill, we would be happy to pay it back,” Scully added. Scully did not respond to further questions regarding the interaction Alston & Bird’s lobbyists had with Duran or the NABH.
Patton Boggs declined to comment on its dealings with the NABH, citing client confidentiality concerns.
The mega-law and lobbying firm’s relationship with the NABH goes back further than any K Street shop, according to public records. Patton Boggs started working for the NABH in September 2007. The firm, which billed the NABH $120,000 for its work, had a Capitol Hill heavyweight, former Sen. John Breaux (D-La.), among the lobbyists on the account.
Patton Boggs terminated its lobbying relationship with the NABH at the end of January 2008. According to The Miami Herald, Patton Boggs had been told by that time that a whistle-blower had approached the Justice Department over allegations of wrongdoing at American Therapeutic Corp., a Duran-controlled company.
Duran and Marianella Valera, his girlfriend and business partner, were co-owners, along with Judith Negron, of ATC, the nation’s largest chain of community mental-health centers. The company was based in South Florida.
That trio, as well as dozens of alleged co-conspirators, provided or accepted millions of dollars in bribes and kickbacks to sign up patients for bogus or unneeded mental-health treatments, according to court documents. Medicare was then billed for these fraudulent treatments.
Duran helped set up the NABH as a lobbying arm to fight any cutbacks in coverage for the treatments, according to the DoJ. The trade association was incorporated in Delaware in December 2006 but didn’t hire its first lobbyists, Patton Boggs, until September 2007.
“Duran was not simply a passive member” of the NABH, prosecutors wrote, “but for nearly four years, he directed the staff … and instigated lobbying efforts. … He directed NABH staff to disseminate to other [Community Mental Health Centers] the tricks of his trade,”including improperly billing Medicare.
“Aside from ATC and its owners, other members of the NABH have been indicted or are under investigation,” federal prosecutors noted in a court filing.
The NABH lobbied lawmakers such as Rep. Ileana Ros-Lehtinen (R-Fla.), according to internal NABH emails and strategy memos drafted by Duran and released by the DoJ. The NABH held a fundraiser for former Rep. Kendrick Meek (D-Fla.) in 2009, and NABH literature played up an August 2010 fundraiser for Sen. Mary Landrieu (D-La.) co-hosted by an NABH staffer.
These lawmakers had no knowledge of the criminal scheme diverting Medicare funds, prosecutors said.
But while public officials often refund political contributions and other support when individual supporters or companies are surrounded by controversy, lobbying and ethics experts see no reason for the K Street firms to return the NABH fees.
“I don’t see why the law firms would have to return money,” crisis communications expert Marina Ein said, noting that corporations often face similar situations when directors on their boards engage in illegal or untoward behavior.
Ethics expert Stan Brand agreed.
“I don’t know that they are on notice yet,” Brand said. “They certainly weren’t part of the underlying crime. I think lobbyists are, despite what everyone thinks, they are able to accept a client on face value if asked to provide service.”
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