Former Arkansas State Medical Board Chair caught defrauding Medicaid and keeping patients against their will

By Lisa Marie Basile | Fact-checked by Davi Sherman
Published August 8, 2023

Key Takeaways

  • Brian Hyatt, a psychiatrist and medical director at Northwest Medical Center in Bentonville, AR, was fired after a whistleblower called attention to questionable behavior. Hyatt also resigned from his position on the Arkansas State Medical Board. 

  • Patients claimed that Hyatt didn’t see or treat them and that he held them against their will. Reports say that he kept patients in-unit and billed Medicaid at the three highest severity codes to receive the highest reimbursement rate.

  • Healthcare providers say that while stories like these are unfortunately nothing new, they speak to systemic issues within healthcare. 

The former chair of the Arkansas State Medical Board, Brian Hyatt, is at the center of a lawsuit in which 25 former psychiatric patients allege that he held them against their will in the psychiatric unit at Northwest Medical Center in Bentonville, AR. At the time, Hyatt was the medical director of the unit. Additionally, the state attorney general says that Hyatt systematically defrauded Medicare. Hyatt’s behavior came to light after an unnamed whistleblower brought attention to the matter.[][] 

Hyatt was the medical director of the Center’s behavioral health unit since January 2018 and served on the Arkansas State Medical Board since 2019. He also ran his own private practice, Pinnacle Premier Psychiatry. Northwest Medical Center fired Hyatt in May. then Hyatt also resigned from the Medical Board. After the allegations surfaced, the Drug Enforcement Administration (DEA) searched his private practice.[] 

According to a report by NBC News, one former patient, Shannon Williams, alleged that Hyatt never saw her in person yet wasn’t allowed to leave the psychiatric unit because doctors claimed she was suicidal. However, Northwest Medical Center had no legal right to detain her, as Hyatt filed none of the required paperwork to keep her in-unit.[][]

Another patient, William VanWhy, was also held against his will for five days. It was only after a sheriff’s deputy brought a court order demanding his release that he was able to leave. Like Williams, VanWhy says that Hyatt didn’t see or treat him. 

Videos from the unit show Hyatt making “rounds” without so much as entering his patients’ rooms. One day, he spent only around a half hour making rounds for 74 patients—amounting to just 20 seconds per patient. Throughout all of this, Hyatt “didn’t want patients to know his name and instructed staff to mark through his name on patients’ armbands,” according to the whistleblower’s complaint.[]

Hyatt then billed Medicaid at the three highest severity codes for every patient. This was done so he could receive the “highest reimbursement rate,” the warrant affidavit, as quoted in the Arkansas Advocate, says. Three other non-physicians who worked under Hyatt said that he also instructed them to bill at those severity codes. In a letter from the Office of Medicaid Inspector General, these allegations were found to be credible.

The Arkansas Advocate says that, “Hyatt billed Medicaid under the highest reimbursement code designating the need for subsequent hospital care more than any other psychiatrist in the state billed for all Medicaid patients under any of the three ‘subsequent hospital care’ codes, according to the search warrant affidavit.” 

A lawyer representing VanWhy told NBC News, “I think that they were running a scheme to hold people as long as possible, to bill their insurance as long as possible before kicking them out the door, and then filling the bed with someone else.”[]

According to the Arkansas Attorney General’s website, “Medicaid fraud occurs when providers use the Medicaid program to obtain money [to] which they are not entitled. Providers who are convicted of Medicaid fraud may lose their eligibility to be a provider in the Arkansas Medicaid program and may have their professional licenses revoked. Convictions may also carry prison terms and large fines.”[] In a letter to the Medical Board, Hyatt says that he resigned not because of any wrongdoing but so that “the Board may continue its important work without delay or distraction” and that he “will continue to defend [himself] in the proper forum against the false allegations being made against [him].”[]

According to NBC News, Hyatt’s legal team says that the conclusions being drawn are speculative and that these allegations are part of a “vicious attack” on Hyatt’s character. 

Northwest Medical Center is set to repay $1.1 million to the Arkansas Medicaid program in a settlement. It is not yet known whether Hyatt will be prosecuted.

According to Dennis Sawan, an attorney at the Nick Schnyder Law Firm, Hyatt’s case is “odd but perhaps not as rare as we’d like to think.” Sawan says that the patients are the real victims here, as they simply want good healthcare treatment and aren’t typically in the frame of mind to ensure correct billing practices. 

“Exposing this type of behavior usually takes a deep, institutional understanding of complex medical coding and billing,” Sawan says, “as well as firsthand information from patients as to what procedures they underwent. And for a number of reasons, not least of which is patient privacy, this type of behavior can often remain in the dark for long periods of time.”

Sawan explains that medical insurance fraud comes with stiff criminal penalties: “This could include a $250,000 penalty and up to 10 years in prison for healthcare fraud and up to a $250,000 penalty and five years in prison for each violation of 18 USC 3729,  commonly known as the ‘false claims act,’” Sewan says. “This law makes it a crime to knowingly present a false claim to the government for payment.”

What is the bigger picture problem?

According to Dr. Ryan Sultan, MD, Assistant Professor of Clinical Psychiatrist at Columbia University Medical Center and Medical Director of Integrative Psych, “These stories periodically show up: a single doctor or a for-profit medical group that is billing Medicaid or Medicare drops the ball on care and is accused of billing for services they didn’t provide. [But] I think it’s less helpful to concentrate on the person or group that took advantage of the system.”

Dr. Sultan says it’s important to “Concentrate on what systemic problems exist that promote this bad behavior.  In the case of government-funded health insurance payments,  particularly Medicaid, the rates that medical groups get…[make it] difficult to break even. Thus, fewer groups accept these insurances, and the ones that do are more likely to engage in unscrupulous behaviors to make a buck.” 

Dr. Sultan says that mental health and primary care may be the worst of all the offenders in this low-payment system. “Most clinics that accept Medicaid are worker-required by an outside entity and/or subsidized by another agency,” he notes.

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