Peer-led mental health agency loses suit against county

The Eugene Register-Guard, Sunday, Jun 6, 2010

A jury has determined that Lane County did not improperly break its contract with a Springfield mental health agency that the county stopped funding last year.

A trial in Lane County Circuit Court resulting from SAFE Inc.’s lawsuit against the county wrapped up last week with the jury’s verdict. SAFE, a nonprofit agency, operated Valia Health Resources, which served about 150 people with schizophrenia and other mental disorders.

Attorneys representing SAFE filed the lawsuit in April 2009 after county officials announced they would discontinue the agency’s Medicaid coverage after two years of alleged mismanagement at Valia. Lane County government administers the federal Medicaid program, which, among other things, pays for mental health services for low-income individuals in Lane County.

The nonprofit agency acknowledged making billing errors but said the Medicaid reimbursements it had received were appropriate and that the county’s review of Valia had numerous errors. In its lawsuit against the county, the agency accused the county of breaching the parties’ contract by refusing to provide a pre-termination hearing.

During the trial, county officials argued that they did provide the required hearing and acted in good faith throughout the contract. The jury agreed with the county on both claims, county officials said.

“We are very gratified by this verdict,” said Karen Gaffney, the county health department’s assistant director. “It aptly reflects our view of both the facts and the law on the issues the jury was asked to decide.”

Valia was one of the first full-service, peer-run mental health providers in Oregon funded by Medicaid. More than half of its dozen or so employees had previously been treated for mental issues.

The county discontinued Medicaid coverage to the agency after saying that regulators found repeated instances of client assessments that lacked documentation, inadequate clinical supervision and treatment goals that did not address issues that qualified for Medicaid reimbursement.

County officials said that although the jury determined that SAFE breached its contract with the county, the jury declined to award monetary damages to the county.

READ – Mental health agency heads to court to keep doors open, Register Guard, April 25, 2009
READ – Mental health provider disputes county’s effort to stop payments, Register Guard, April 29, 2009
READ – County, agency try to reach agreement, Register Guard, May 11, 2009
READ – Mental Health Disaster, Lane County shuts down a cost-effective service, by Drake Ewbank, Eugene Weekly, October 2009