The federal government is seeking to seize nearly $18.8 million in cash, bank funds, and precious metals as part of a civil forfeiture case alleging a Detroit-area behavioral health provider defrauded Medicaid and used forced labor involving people receiving treatment.
The complaint, filed Tuesday (Sept. 22) in U.S. District Court for the Eastern District of Michigan, names funds held in multiple bank accounts associated with Quality Behavioral Health Inc., as well as accounts connected to Naveed Syed and Packard Hotels Inc.
The government is also seeking cash and precious metals seized from two properties in Troy.
The complaint lists approximately $18.79 million in property subject to forfeiture.
Federal agents seized the property on or about Aug. 26, according to the filing.
The government alleges Syed, described in the complaint as the owner and operator of Quality Behavioral Health, carried out a scheme to defraud Medicaid by billing for services it did not provide.
Prosecutors further allege that Syed used forced labor provided by Medicaid beneficiaries receiving treatment through the organization.
The allegations have not been proven in court.
The complaint describes Quality Behavioral Health as a nonprofit organization that provides substance use recovery services to Medicaid beneficiaries in the Detroit area.
According to the filing, the organization operates facilities in Detroit, Troy, and Sterling Heights.
The complaint alleges Quality Behavioral Health submitted claims to Detroit Wayne Integrated Health Network for services that were supposed to be provided as part of residential and other treatment programs.
According to the filing, the organization claimed to provide a structured program that included services such as relapse prevention, behavioral health treatment, group therapy, anger management, career development, family therapy, and acupuncture.
But witnesses interviewed by law enforcement told investigators that patients received little or none of those services, according to the complaint.
Some allegedly spent much of their time watching television, playing cards or otherwise waiting without receiving treatment.
The government also alleges Syed directed an employee to create fake patient progress notes and backdate patient files after a DWIHN audit found required treatment plans and other records were missing.
The complaint further alleges Quality Behavioral Health submitted more than $611,000 in claims for housing male clients in “hallway houses” without the certifications required to house them.
Forced labor allegations
The federal complaint also alleges that Syed recruited Medicaid beneficiaries to work at facilities he controlled after interviewing them about their skills and physical abilities.
According to the filing, some beneficiaries were required to work 12-hour days, six or seven days a week. Some allegedly had to live in Syed-controlled housing as a condition of keeping their jobs.
The complaint alleges some beneficiaries were required to sign so-called volunteer agreements that included $40 per week in compensation.
Federal prosecutors also allege Syed controlled where some beneficiaries lived, required them to seek permission to leave certain facilities, and threatened eviction if they did not follow his rules.
The complaint says beneficiaries told law enforcement they feared losing their housing and that Syed reminded them he had the power to remove them from the facilities.
The government also alleges Syed directed employees to prescribe medications for opioid addiction, including methadone, Suboxone, or Vivitrol, even when the medications were not medically necessary.
Property seized
The property targeted in the forfeiture action includes millions of dollars held in accounts at Citizens Bank, Flagstar Bank, First State Bank, Lake Michigan Credit Union, Huntington National Bank, Bank of America and JPMorgan Chase.
The government also seeks $109,812 in cash seized from a dresser drawer at a Troy residence and $122,194 in cash seized from another Troy residence.
Investigators also seized miscellaneous precious metals from safes at the two properties, according to the complaint.
The FBI seized the property, and the complaint says it will transfer the seized funds to the U.S. Marshals Service’s Seized Assets Deposit Fund.
Some Bank of America funds will remain on deposit while a related motion is pending in federal court. The filing says the precious metals remain in FBI custody.
The government is seeking a court order forfeiting the property to the United States under federal laws covering health care fraud and forced labor.
The case is a civil forfeiture proceeding, meaning the property itself is the subject of the action.
The complaint asks the court to issue warrants for the property and allow interested parties to contest the forfeiture.
The FBI investigated the case.
The U.S. Attorney’s Office for the Eastern District of Michigan filed the complaint.
