Not guilty: Jury acquits men of all counts in Medicaid fraud case

Posted 3/15/22

Over the span of eight days in a Cheyenne courtroom, federal prosecutors laid out a case that had been a decade in the making, arguing that a Powell treatment center had defrauded Medicaid out of …

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Not guilty: Jury acquits men of all counts in Medicaid fraud case


Over the span of eight days in a Cheyenne courtroom, federal prosecutors laid out a case that had been a decade in the making, arguing that a Powell treatment center had defrauded Medicaid out of millions of dollars.

After 5 1/2 hours of deliberations, however, a jury rejected the allegations. The 12-member panel voted unanimously on Thursday to acquit former Northwest Wyoming Treatment Center employees Matthew “Ty” Barrus, Greg Bennett and Devin Dutson, finding them not guilty of all charges brought by the U.S. Attorney’s Office.

The men didn’t present a formal defense, as their attorneys felt it wasn’t necessary, but sought to show that Northwest Wyoming Treatment Center provided good care and believed it was in compliance with Medicaid rules.

For Barrus, who served as the center’s executive director, he said the verdicts brought relief that a 6 1/2-year “nightmare” might have come to an end. He said he was also thankful for the ability to defend himself within a fair judicial system, his defense attorneys and the support of his family and friends, among other things.

But Barrus said it was not a victory. For one thing, he noted that Northwest Wyoming Treatment Center — which was shut down and had all of its assets seized by the federal government years ago — no longer exists.

“We really liked our program and felt that we were successful,” he said, “And it’s been tough.”

Until state and federal investigators came knocking on the center’s door in December 2015, Barrus said they “never thought that we were even close to doing anything wrong.”



Northwest Wyoming Treatment Center provided substance abuse treatment from 2009 to 2016, serving youth between the ages of 12 and 17 who were struggling with addictions to controlled substances. At its peak, the center had roughly 20 employees, with Barrus as executive director, Bennett as clinical director and Dutson employed as a therapist. Barrus was the center’s executive director, Bennett was the clinical director and Dutson was employed as a therapist.

Most of the center’s clients came from court-ordered placements — many from the Wind River Indian Reservation — and spent months in the program. They were, according to the defendants’ attorneys, “some of the most psychologically damaged, and hard to reach, children in the State of Wyoming.”

Barrus said the clients were addicts dealing with mental issues, trauma, abuse, generational addiction, homelessness and/or risky behavior, and they were there to receive 24/7 residential treatment.

“It was hard work dealing with some of the kids,” he said, noting the circumstances they came from. But Barrus also called it a privilege, saying they were generally good kids dealing with addictions.

When the Commission on Accreditation of Rehabilitation Facilities (CARF) surveyed the center in December 2015, it noted “strengths in many areas” and recertified the facility for the three-year maximum.

“The staff at NWTC provides the consistent caring and nurturing that has often been missing in the lives of the clients served,” surveyor David Blondeau wrote in part, adding that the staff were “highly credentialed and utilize state-of-the-art interventions.”

However, roughly a week later, a team of investigators from the Wyoming Department of Health’s Medicaid Program Integrity and law enforcement officers came to the center’s door, as part of an investigation of the organization’s billing practices.

Most of the clients at the nonprofit center were Wyoming Medicaid beneficiaries. Over a period of six years, NWTC billed Medicaid more than $8.5 million for the care it provided to more than 100 clients — and authorities came to believe that much of the billing was excessive and inappropriate, including when compared to other facilities.

In January 2016, Program Integrity demanded that the center repay nearly $1.35 million, which effectively shut the operation down.

Then in March 2019, the U.S. Attorney’s Office moved to seize all of the center’s property — including three buildings, a vacant lot and cash — asserting that the assets represented the proceeds of false and fraudulent bills submitted to Medicaid; the center’s board agreed to forfeit the property. Then in September 2019, federal prosecutors indicted Barrus, Bennett and Dutson on a combined total of 14 felony charges.


Billing ‘all day every day’

A grand jury generally alleged that the men had submitted claims for activities that didn’t qualify as therapeutically necessary substance abuse treatment, for activities not covered by Medicaid and for services the center or their staffers weren’t authorized or licensed to provide. The indictment also alleged the center had “upcoded” some claims — for instance by billing what the government saw as group recreational activities at the higher rate for individual treatment.

A federal prosecutor asserted earlier this year that NWTC had billed “all day every day for activities that are not covered by Medicaid (including sleeping, eating, playing video games, weightlifting and traveling the state for recreational activities) as if those activities were covered substance abuse treatment.”

As an example, on one Sunday afternoon and evening in March 2014, NWTC records show a client ate, showered, watched TV, played video games, placed a phone call to a family member and slept. For monitoring the teen during those eight hours, NWTC billed Medicaid $240, according to reporting by the Casper Star Tribune, and classified the time spent as “Comprehensive community support services (individual rehab).”

Other notes flagged by the government included a trip to the Sleeping Giant Ski Area, paintball, basketball games and work cleaning up a ranch.

To the untrained eye, Barrus said NWTC activities could look simply like recreation, but “everything that we did had a therapeutic value and purpose.”

He said addicted youth lacked basic skills when they arrived. They needed to relearn how to enjoy things other than drugs and how to reintegrate into society. Experiential activities — such as hiking or other adventures — offered clients healthy ways to find happiness and counter the pull of controlled substances, Barrus said, while learning other skills prepared them to return to life.

The CARF surveyor, Blondeau, listed the center’s emphasis on healthy living as a strength and specifically noted the center’s frequent use of Northwest College’s recreational facilities.

An expert retained by the defense, Rhode Island College Professor of Social Work Frederic Reamer, backed up the center’s contentions about the treatment they offered.

After reviewing the treatment provided to 19 clients whose bills were questioned by investigators, Reamer said he’d found “compelling evidence that the treatment model at the Northwest Wyoming Treatment Center, Inc. — which included a significant mix of traditional counseling services such as recreational, adventure, social and education services — met widely embraced national standards for comparable programs and associated standards of care.”

He said the 4,300 documents he reviewed made it “abundantly clear” that the center’s recreational and social activities typically had a therapeutic purpose, such as community living skills training or use of free time.

Whether fishing, shopping, playing football, snowboarding or in supervised free time, Reamer said it appeared staffers routinely noted the therapeutic features of the activities, including logging clients’ emotional and behavioral reactions. He included a progress note that referenced a trip to the movie theater.

“Encouraged appropriate behavior and communication, follow [sic] directions and request of staff. Very funny [sic] time,” the staffer wrote. “Had appropriate behavior in the community.”

Reamer also highlighted notes from various group sessions — including one in which a client shared his feelings about being perceived as a bully.

“… the group was able to confront him appropriately about some of his behaviors,” the therapist wrote in the document, adding that the discussion “evolved from there into how each client could work on their behaviors and respecting the boundaries of those around them.”

Meanwhile, the client in question “expressed that he will make a big effort to change his behavior, as he does not want to be perceived as a bully.”

Reamer said that in his experience, the records he reviewed were “unusually detailed, high-quality documentation.” He opined that the center and its staff typically provided services in a way that was consistent with Wyoming Medicaid guidelines.

Former staffers who were called as witnesses by the government during this month’s trial also defended the center’s practices.

Christy Muecke, who taught at NWTC for roughly five years, said in an interview that “we did amazing things for adolescents; I felt we changed lives.”

“... we planted a seed and that seed might take a while to grow … but we planted a seed,” she said, “and in time, our goal was to have those adolescents become successful and active members of society.”


A long-running investigation

Law enforcement records show that NWTC, Barrus, Bennett and Dutson’s billing practices were scrutinized as far back as 2010. The probe dovetailed with an investigation into former Powell psychologist Dr. Gib Condie, who had founded Northwest Wyoming Treatment Center. Condie also initially handled the center’s Medicaid billing through his Big Horn Basin Mental Health Group.

Through his business, Condie submitted bills on behalf of 80 to 90 different providers in the area, taking a cut of the Medicaid payments — usually in the neighborhood of 10-15% but up to 50%, court records indicate.

An initial state investigation into Condie’s billing practices was closed without any charges. Medicaid Fraud Control Unit Director Christine Stickley told Condie in January 2013 that the unit had “not identified at this time any fraudulent activity” and closed its case.

Year later, Stickley told an investigator that “as of 2013, the rules and regulations regarding Medicaid billing had to be worked on and ‘clarified’ to eliminate ‘wiggle room’ in the rules regarding what could legitimately be billed to Medicaid,” according to a defense filing that summarized her conversation.

However, the investigation was reopened in 2015 by a new Manager of Quality Assurance and Program Integrity, Mark Gaskill, and he referred his findings to the federal government the following year. It led to Condie being indicted on 234 counts of health care fraud in May 2017. Assistant U.S. Attorney Eric Heimann said Condie’s scheme was to diagnose clients “with mental health disorders, which they didn’t have” and then bill Medicaid “as if they were receiving psychotherapy to cure the mental illness.” Heimann said the clients were receiving life skill/community maintenance rehabilitative treatment — giving examples of hiking, camping and playing video games — but billing it as mental health treatment allowed the providers and Condie to make more money.

Condie defended his actions and contended that he and his partners had provided good services to clients — receiving a slew of letters in his support — but he ultimately pleaded guilty to one count of fraud. 

Condie was sentenced to three years in prison, forfeited somewhere around $1.5 million worth of property and was ordered to pay $2.28 million in restitution. The former psychologist, who has since moved to Washington, was released from federal probation in December and is paying $700 a month toward his restitution, court records say.

It was after securing Condie’s conviction in January 2018 that the U.S. Attorney’s Office turned its attention to NWTC, a process that culminated in Thursday’s acquittals.


A case for ambiguity

Representatives for NWTC officials have said they relied on Condie’s leadership and advice in their billing practices. Between trusting Condie, and the fact that multiple audits involving thousands of pages of center documents yielded no feedback from the Wyoming Medicaid, Barrus said that “it didn’t even come into our minds that we were doing anything other than what was needed and what was required.”

In a February filing, Heimann and Special Assistant U.S. Attorney Travis Kirchheffer rejected the idea that Medicaid’s failure to tell the center they were breaking the rules could be a defense, saying it didn’t meet the elements of entrapment by estoppel.

“The defendants might have a defense if a Medicaid program manager told them they could bill Medicaid for sleeping and weightlifting and video games, etc., but silence … does not establish the defense,” they wrote, arguing that the only relevant factor was the defendants’ mindsets.

However, the defense team — which consisted of Terry and Emily Harris of Cheyenne for Barrus, Ian Sandefer and Jamie Woolsey of Casper for Bennett and Edwin Wall of Salt Lake City for Dutson — also pointed to ambiguity in the rules in pretrial motions.

“Medicaid has not defined what constitutes ‘therapy,’” Terry Harris and the other attorneys wrote in a filing earlier this year. Further, while the rules prohibit payments for activities that are “solely” recreational, the activities can qualify if they’re part of a treatment plan.

Speaking Sunday, Barrus said he wished Wyoming Medicaid officials would have shared any concerns with the NWTC’s billing early on, so they could have worked it out.

“We would have adapted, we would have done whatever, but it never happened,” he said, regretting the center’s closure.

Barrus said it’s been a traumatic experience, including an inability to talk to close friends who were involved in the case for years. The not guilty verdicts were like lifting an 800-pound gorilla off his chest, he said.

“We are absolutely thrilled as a family and as Powellites to be able to now coexist in a community that we love, with that now not hanging over us,” Barrus said.

The Tribune was unable to get in contact with Bennett.

Dutson — who’s since relocated to Utah — said Sunday that he would let the trial and situation speak for itself.

“The truth came out,” he said, “and that’s all I could ask for.”

The U.S. Attorney’s Office declined to comment on the case.