Uncovering Negligence: The False Claims Act Case Against Arbour Counseling Services

In the realm of healthcare, the False Claims Act serves as a crucial tool in safeguarding the integrity of medical services and protecting patients. One such case that underscores the significance of this legislation involves the tragic care of Yarushka Rivera at Arbour Counseling Services in Lawrence, Massachusetts. This blog explores the genesis of the False Claims Act case, the alleged violations, and the implications for healthcare providers.

I. Facts & Background:

Arbour Counseling Services, owned by Universal Health Services, operates as a mental health services provider in Lawrence, Massachusetts, participating in the state Medicaid program, MassHealth. The Massachusetts regulations (130 Mass.Code Regs. §§ 401.401–650.035) outline the requirements for mental health services, emphasizing the necessity of qualified staff and proper supervision.
Yarushka Rivera, a MassHealth recipient, began treatment at Arbour in 2007, encountering unlicensed and unsupervised staff, a violation of state regulations. The relators, Yarushka’s parents, alleged that Arbour’s noncompliance rendered reimbursement claims submitted to MassHealth as false under the False Claims Acts.

II. Regulatory Violations:

The MassHealth regulations establish guidelines for mental health centers, distinguishing between parent centers and satellite facilities. Arbour, being a satellite facility, must adhere to strict supervision and licensure requirements. Noncore counselors and unlicensed staff, in particular, are mandated to be under direct and continuous supervision.
The relators asserted that Yarushka’s care involved several staff members who were either unlicensed or lacked proper supervision. The tragedy unfolded as Yarushka experienced adverse reactions to medication prescribed by unqualified staff, leading to a fatal seizure in October 2009.

III. Procedural Background:

Following Yarushka’s death, the relators filed complaints with various state agencies, revealing numerous regulatory violations. The Department of Public Health (DPH) found Arbour in violation of fourteen regulations, confirming the relators’ allegations. Arbour entered into a corrective plan with DPH to rectify deficiencies.
The relators filed a complaint under the False Claims Acts, alleging that Arbour’s reimbursement claims were false due to misrepresentations of staff qualifications and supervision compliance. The district court, however, dismissed the complaint, arguing that the relators failed to distinguish between conditions of payment and conditions of participation.

IV. Analysis:

The relators appealed the dismissal, contending that Arbour’s noncompliance with regulations constituted falsity under the False Claims Act. The court, in its analysis, rejected the distinction between conditions of payment and participation, emphasizing that any noncompliance with payment conditions is sufficient for an FCA claim.
The court found that Arbour’s failure to maintain proper supervision and employ qualified staff violated MassHealth regulations, making reimbursement claims false. The relators’ detailed allegations linking specific claims to regulatory violations were deemed sufficient under Rule 9(b).


The False Claims Act case against Arbour Counseling Services sheds light on the critical role of regulatory compliance in healthcare. The relators’ perseverance in uncovering violations highlights the importance of holding healthcare providers accountable for meeting essential standards. This case serves as a reminder of the FCA’s potency in safeguarding patient welfare and maintaining the integrity of government healthcare programs.

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