California Behavioral Medicine Provider Agrees to Pay $2.75 Million for False Claims: What It Means for Providers

What Happened

Comprehensive Psychiatric Services (CPS), a behavioral medicine provider headquartered in Walnut Creek, California (doing business as American Psychiatric Centers, Inc.), has agreed to pay $2.75 million to resolve allegations that it violated the False Claims Act. Department of Justice+2Becker’s Behavioral Health+2

Here’s what the allegations involve:

• From 2015 through 2022, CPS submitted claims to government healthcare payors using the CPT add-on psychotherapy codes 90833 and 90836. Office of Inspector General+1

• These codes are “add-on” codes that may only be billed when psychotherapy services are provided in conjunction with an evaluation and management (E/M) visit, and require specific documentation. Department of Justice+2Becker’s Behavioral Health+2

• The government alleged that CPS either did not provide the services described by the codes or failed to adequately document that they had been provided. Department of Justice+1

As part of the settlement:

• CPS will pay $2,615,569.32 to the United States and $134,430.68 to the State of California. Department of Justice+1

• The settlement resolves the allegations, but CPS did not admit to wrongdoing or liability as part of the resolution. Department of Justice+1

Why This Case Matters

For behavioral health providers, this settlement highlights important lessons and risks around billing, documentation, and compliance. Here are some of them:

1. Add-On Code Use Is High RiskThese “add-on” psychotherapy codes (90833, 90836) are tempting because they increase reimbursement, but they come with strict conditions. If a provider bills these codes when the criteria aren’t met, or documentation is insufficient, it can lead to serious risk of False Claims Act exposure.

2. Documentation Is Not OptionalBillers must be able to show — with clinical notes, supporting records — that the psychotherapy add-on service was in fact delivered in conjunction with a qualifying E/M visit and met all the requirements. Ambiguous or missing documentation can be just as problematic as entirely made-up claims.

3. Long Exposure PeriodsThe investigation covered seven years, from 2015 to 2022. Providers should assume that bad billing practices—even if they were once thought safe or standard—can come under scrutiny long after the fact.

4. Multiple Enforcement PartnersThis case was handled by the U.S. Attorney’s Office (Northern District of California), HHS-OIG, and other federal/state oversight offices, showing that government investigations tend to be coordinated. Department of Justice+2Office of Inspector General+2

5. Settlements Without AdmissionPaying to settle doesn’t always mean admitting liability, but the costs—financial, reputational, operational—can still be high. Often, settlements also trigger compliance reviews and may lead to ongoing remediation.

Best Practices for Behavioral Health Providers

Given the lessons from this CPS case, here are some actionable steps for practices to reduce risk of similar exposure:

Area	What to Do
Billing Protocols	Ensure staff are thoroughly trained on when add-on psychotherapy codes are permitted, and maintain written policies.
Documentation & Clinical Oversight	Maintain robust documentation that clearly ties services delivered to billed codes. Supervisors should regularly audit charts to ensure compliance.
Internal Audits & Self-Disclosure	Periodically audit past claims, especially for high-risk or add-on codes. If issues are found, consider voluntary self-disclosure (where appropriate) to mitigate penalties.
Policy & Training	Update policies and conduct training on False Claims Act risk, proper use of E/M plus psychotherapy codes, documentation standards, and ethical billing.
Legal Counsel Integration	Work with legal counsel early when implementing or changing billing practices. Outside counsel can also review potential risk areas and help prepare if contacted by enforcement agencies.

Lynne Legal’s Take

This settlement reinforces that even seemingly technical billing practices—like “add-on” codes for psychotherapy—carry meaningful legal risk if rules are not strictly followed. For behavioral health providers, compliance isn’t just best practice—it's essential for sustainability and avoiding costly liability.

At Lynne Legal, we help providers by:

• reviewing and updating documentation and billing policy

• auditing past claims with potential risk

• designing compliance training specific to behavioral health billing challenges

• guiding risk mitigation strategies including self-disclosure when needed