Baltimore attorney and Orioles owner Peter Angelos, who gained prominence by suing asbestos companies, is setting his sights on another big target: a once-corrupt chain of psychiatric hospitals.
Mr. Angelos' firm is running newspaper ads soliciting complaints from former patients of nine psychiatric hospitals in the Baltimore-Washington area. The hospitals belonged to a huge California-based company that last year paid a record $379 million as part of a federal fraud investigation.
"Appropriate Psychiatric Treatment?" reads a boldface headline on the ad, which began running in The Washington Post last week. Among the practices that may have occurred at the hospitals -- including two in Montgomery County -- are "improper admission, keeping patients longer than was necessary in order to collect insurance, and improper diagnoses and treatment," the ad says.
The claims against National Medical Enterprises, which owned NTC the hospitals but later sold them as part of an agreement with the government, are nothing new. The Santa Monica-based company has been hit by lawsuits since 1991, when allegations of fraud surfaced.
Mr. Angelos' ad comes amid the company's recovery and a planned $3.3 billion merger with a rival hospital company.
"They're a very deep pocket," said Kirk Nahra, a Washington attorney who on behalf of 13 insurance companies successfully sued National Medical for $90 million in 1993. National Medical, in addition to the millions it paid to the government, has paid more than $200 million in lawsuit settlements, he said.
"They're a major, major company. It's sort of scary that someone can pay six or seven hundred million and be fine," Mr. Nahra added.
News of potential lawsuits didn't come as a shock to National Medical officials. Other law firms have run similar ads in Texas, said company spokeswoman Diana Takvam.
"We did expect that additional litigation could be filed. We'll proceed accordingly based on the merits of any case that might be filed," she said. "We've resolved the most significant litigation [to date]."
The Maryland psychiatric hospitals named in Mr. Angelos' ad are the Psychiatric Institute of Montgomery County and the Fairbridge Residential Treatment Center. Both list Rockville addresses and have since been sold by National Medical.
Mr. Angelos did not return phone calls to comment on the ads. His chief deputy, Russell Smouse, declined to answer questions, saying, "It would be premature to comment right now."
In 1992, Mr. Angelos emerged as possibly the nation's pre-eminent asbestos lawyer after his firm won a landmark case against seven asbestos manufacturers -- whose insurers proved have deep pockets as well.
His firm reportedly earned more than $300 million in the asbestos cases, giving Mr. Angelos enough capital to lead an investment group that paid a record $173 million for the Orioles in 1993. Until a month ago, he was in the running to buy the Tampa Bay Buccaneers professional football team, but his $211 million bid was rejected.
National Medical pleaded guilty last year to charges related to making illegal payments for referral of patients, including tens of thousands who allegedly were hospitalized for psychiatric treatment they did not need. When the patients' insurance reimbursements ran out, they were declared cured and were discharged.
In August 1993, hundreds of federal agents raided more than 20 National Medical facilities across the nation and seized information showing the company paid as much as $40 million in bribes to health care providers, federal officials said.
Under an agreement with the government, National Medical said it would divest more than 60 psychiatric hospitals and focus on acute-care hospitals as its primary business. Under the agreement, the company's remaining hospitals could continue to participate in federally funded health care programs.
After paying the largest health care fraud settlement in U.S. history, National Medical began to rebuild under a new chief executive.
Four months ago, with its stock price rising and company officials calling their efforts a "remarkable turnaround," National Medical announced a merger with rival American Medical Holdings Inc.