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Riverside sentencings should serve as warning shot to healthcare executives


If you had any doubt that federal prosecutors are serious about bringing the hammer down on healthcare executives who oversee fraud schemes, look no further than the sentences handed down to three administrators at Riverside General Hospital over the last month.

Collectively, three administrators of the notoriously mismanaged hospital will be spending 115 years in prison. That includes a 45-year sentence for Riverside's president, Earnest Gibson III, and a 40-year sentence for Mahammad Khan, the hospital's former assistant administrator and Gibson III's right-hand man. Gibson's son, Earnest Gibson IV, who operated a satellite psychiatric facility linked to Riverside, will also receive 20 years for his role in a scheme that netted more than $150 million. Another administrator that operated a separate satellite location is awaiting sentencing.  

There's no shortage of sordid details in the multi-million dollar theft. The three administrators worked with seven others to concoct a scheme that took advantage of mental health and drug rehab patients. The hospital billed for intensive outpatient therapy known as a partial hospitalization program (PHP) for these patients even though many of them were watching TV in place of therapy.

To hear the elder Gibson tell it (as he did months ago according to The Houston Chronicle), other than some misplaced trust in his subordinates, he was an exemplary hospital executive. It reminds me of a job applicant who offers up "caring too much" as a professional weakness.

The judge didn't buy it, either. The 45-year sentence is one of the largest ever, rivaling a 50-year sentence doled out to the owner of a Florida mental healthcare company in 2011. Similarly, two other co-conspirators in that scheme, including the company's co-owner, were sentenced to 35 years each.

In case it wasn't crystal clear in the Florida case four years ago, the sentencing for the Texas executives sends an unadulterated message to healthcare administrators that are ensnared in healthcare fraud schemes: Fraud punishments will not be light, particularly for those in a position of power.  

Nor should they be. Schemes of this magnitude that target federal healthcare funds are reprehensible not just in terms of stolen Medicare dollars, but in the cost to patient care. Hundreds of patients, used as pawns in the scheme, never received the mental health and drug treatment they needed. Furthermore, as a result of the scandal, Riverside was forced to surrender its substance abuse treatment license last August, effectively washing away any notable progress the hospital made in previous years.

Gibson III described Riverside as a passion-project. As the leader of Riverside, he navigated the hospital through physical expansion, adding services that focused specifically on drug rehabilitation and primary care, he told The Chronicle following his conviction. According to Gibson III, the allegations against him and his son were based on "professional jealousy and racism," arguing the hospital was "too successful" in acquiring substance abuse grants.

If the former CEO and his executive co-conspirators want the credit for making the hospital "too successful," I suppose they'll now have to live with the consequences of that success, which was inextricably tied to a system of kickbacks and false claims.

To some, the sentences may seem unnecessarily harsh, but these cases clearly show that when executives are entangled in multi-million fraud schemes, there's very little to stop the avalanche of corruption.

That's why hospital administrators should see these extended sentences as a warning shot from the feds. The worn-out argument from executives claiming that they were deceived by those below them, or that they can't be aware of every operational detail, is growing stale. It's certainly harder to believe when it involves a nine figure sum. - Evan (@HealthPayer)