SANTA FE — Eight providers of mental health services have sued New Mexico Gov. Susana Martinez's administration, hoping to obtain a federal court injunction that would restore their taxpayer funding.
Last month, Sidonie Squier, cabinet secretary of the Human Services Department, stopped state and Medicaid funding to 15 providers across New Mexico.
She said a special audit by a Boston company had uncovered suspicion of fraud and overpayments of more than $36 million from 2009 to 2012. Squier's department has since restored at least partial funding to three of the providers.
Eight others that are suing want an injunction to regain funding so they can remain in operation and continue serving patients, said their attorney, Patric Hooper of Los Angeles.
In a telephone interview Friday, Hooper said all eight nonprofit providers are honest operations with excellent track records. One of them, Southwest Counseling Center Inc. of Las Cruces, issued a statement saying that the eight plaintiffs had "provided services in New Mexico for more than 30 years, always with excellent audit results."
Hooper said Squier's action in cutting off funding was done without the providers having any opportunity to respond. He said her decision jeopardizes the providers chances of survival and leaves patients vulnerable if treatment programs collapse.
"They cannot last more than three or four weeks. They would have to shut down," Hooper said of the eight that are suing. "We're asking that the process be slowed down -- give people an opportunity to be heard so the truth can come out."
Matt Kennicott, a spokesman for the state Human Services Department, said it complied with federal law in bringing the audit findings and the possibility of fraud to state Attorney General Gary King for an investigation. The seriousness of the case made it necessary to shut down funding, he said.
Kennicott said all 15 providers had applied for good-cause exceptions that would restore the flow of money. But given the severity of the audit allegations, a change in management probably would be necessary for some of the providers to qualify, he said.
As for claims of due process violations, Kennicott said the law limited what could be disclosed to the providers that were stripped of funding. This was to make sure any investigation would not be compromised, he said.
But Hooper said the remedy was unduly harsh. Getting a court injunction appears to be the only way to save the providers financially and to protect their reputations for honesty, he said.
Legislators on Wednesday questioned Squier about her decision to cut off funding, and about why in the last three years the state contractor that reviews behavioral health providers did not find the problems now being characterized as widespread and possibly criminal.
Squier's agency has defended the work of the oversight company, OptumHealth. But in February of this year, the state Human Services Department contracted with a second company, Boston-based Public Consulting Group Inc., to audit providers across the state.
It was Public Consulting Group's findings that alleged overpayments of more than $36 million during the three years that were audited.
"This amounts to nearly 15 percent of all payments made to these providers," the company said in its summary.
The lawsuit brought by eight of the providers alleges that similar allegations made by Public Consulting Group against providers in North Carolina were found by that state's auditor to be overblown and unsupportable.
Public Consulting Group listed a total of $38.5 million that could be recouped from providers in North Carolina for overbilling. But the North Carolina auditor said most abuses "identified by PCG have not proven reliable." The auditor said $3.7 million had been recovered.
Tension between Squier and Democrats in the Legislature who are tracking the case reached a high point Wednesday during a hearing in Albuquerque. Squier walked out after about three hours, even saying she would not accept questions from state Sen. Cisco McSorley, an attorney from Albuquerque.
"She was, from our perspective, being questioned like a murder suspect on the stand. From our perspective, she was very abused," Kennicott said.
State Sen. Bill Soules, D-Las Cruces, said lawmakers were doing their job. He said they were obligated to seek answers from Squier on how the investigation and auditing were conducted.
"We're not trying to defend the agencies, but we are concerned about the process. The agencies are being tried in the court of public opinion," Soules said.
The eight providers suing to obtain an injunction against Squier are:
Milan Simonich, Santa Fe bureau chief for Texas-New Mexico Newspapers, can be reached at 505-820-6898. His blog is at nmcapitolreport.com.