Mental health administrators cleared of charges

CARLSBAD — Charges of Medicaid fraud against three administrators of the now defunct Carlsbad Mental Health Center were dismissed in magistrate court Thursday.

Noel Clark, Darril Woodfield and Michael Stoll were indicted in June 2015 by the office of Attorney General Hector Balderas following an investigation they said revealed over-billing and falsification of documents at Carlsbad Mental Health Center.

However, Judge Daniel Reyes Jr. said there was not enough probable cause in the case presented by the prosecution.

Reyes discharged one count of conspiracy to commit Medicaid fraud, four counts of Medicaid fraud, four counts of falsification of documents and one count of fraud against all three men in a preliminary hearing at the Carlsbad Magistrate Court.

The judge said the evidence did not show probable cause that the men knowingly committed fraud

"Mr. Stoll is pleased that his name has been cleared and he can continue to provide much needed services to the people of his community," said Sara Sanchez, Stoll's attorney.

In a comment submitted through his attorney Zach Ives, Clark said: "I’m relieved that this ordeal is over. I want to thank everyone who supported me. I’m grateful to Judge Reyes for carefully considering the evidence in my case.”

Woodfield's attorney, Barry Crutchfield, did not respond to requests for a comment.

Despite his decision in favor of Stoll, Clark and Woodfield, Reyes did bind over their co-defendant, Carlsbad Mental Health Center, on six of the original 10 counts against it.

"On April 21, 2016, Magistrate Judge Daniel Reyes Jr. bound over the corporation, Carlsbad Mental Health, for trial on one count of Conspiracy to Commit Medicaid Fraud, one count of Medicaid Fraud, and four counts of Falsification of Documents (Submitting False or Incomplete Information)," said James Hallinan, spokesman for the AG's office, in an emailed statement.

Kenneth Dugan, the corporation's attorney in the case, said he expects to win a judgement in favor of the center's board if the case proceeds to trial in district court because of the evidence and the judge's decision .

Dugan also said that Carlsbad Mental Health intends to file a motion for prosecutorial misconduct against the attorney general's office, alleging that prosecutors pursued charges against his client despite knowing they were false and that to proceed would be unethical.

"The board of Carlsbad Mental Health has authorized me to pursue them for prosecutorial misconduct, so if the case is not dismissed we will absolutely pursue that," Dugan said.

In response to the claim, Hallinan said: "The Office of the Attorney General would never bring charges that were not supported by probable cause. A review of the record and proceedings in this matter and the case pending against administrator John Bain support that. The Office of the Attorney General will vigorously defend against any motion making such claims."

Dugan said that the damage done by the investigation into Carlsbad Mental Health and 15 other mental health providers in the state which were shut down by Gov. Susana Martinez has caused irreparable damage to communities in the state.

The Carlsbad Mental Health Center shut its doors in 2012 after a whistleblower alleged fraud.

In April, all 15 providers were cleared of fraud allegations following a second financial audit investigation. Martinez ordered state Medicaid payments to the providers frozen in 2013 pending an investigation, prompting many of those providers to declare bankruptcy.

Local response

Chairman of the Carlsbad Mental Health Task Force, Jeff Diamond, agrees with Dugan, adding that the resources lost in defending and prosecuting the case would have been better used to help address mental health service gaps in Carlsbad.

"The whole sordid affair has caused a great deal of harm to the community and to people needing mental health  services," Diamond said. "A dismissal is not as good as a finding of not guilty, but I am happy, nonetheless, for the defendants and their families."

He adds: "A great deal of resources that could have gone into a program such as Crossroads to treat substance addicted women and their young children were wasted and whatever resources of Carlsbad Mental Health and its dummy corporation, Guadalupe Properties (has) needs to be redirected to a new Crossroads program, or otherwise to the beneficial use of the mentally ill in this community or elsewhere in New Mexico."

Until the case is resolved, Dugan said that assets belonging to the Mental Health Center, including their former building, cannot be used to address those gaps.

The task force was started under the direction of Carlsbad Mayor Dale Janway in response to the closure of Carlsbad Mental Health Center and the subsequent pulling out of three additional companies brought in to take over administration of the services.

"As we’ve stated during all parts of this investigation, our interest is to make sure sufficient mental health services are available to the citizens of Carlsbad and New Mexico. There are still many gaps that need to be fixed. A lot of damage was done to New Mexico’s entire behavioral health system as a result of the way these accusations were handled, and the priority right now needs to be restoring these needed services. This was also very difficult for the people who were accused, and their reputations have been damaged irreparably, our thoughts are with them and their families," Janway said.

Hallinan said that the AG's office is now focused on prosecuting the remaining charges against Carlsbad Mental Health and the fourth administrator indicted in July, John Bain.

"The Office of the Attorney General will proceed with the pending cases wherein probable cause was found," Hallinan said.

Bain's attorney, Gary Mitchell, filed a motion April 18 to dismiss the case due to "improper preliminary hearing that did not comply with due process of law." Neither Bain nor his attorney responded to requests for comment.

Bain is scheduled to appear for a pre-trial conference July 12 in District Court, however, before Judge William Shoobridge.

Jessica Onsurez can be reached at 575-628-5530.