Submitting Claims for Off-label Prescriptions to Medicaid May Constitute Fraud

In my view, one of the most destructive developments in psychiatry in recent years is the prescribing of neuroleptic drugs to children.  Much of this prescribing is off-label, meaning that the prescribed use is not approved by the FDA.  Off-label drug prescribing is legal, however.  Once the FDA has approved a drug for one purpose, a physician may prescribe it for another purpose.

But under Medicaid rules, the physician is not permitted to bill Medicaid for writing this prescription unless the use of the drug in the specific circumstances is endorsed by any of the three pharmaceutical compendia approved by Congress for this purpose.  A physician who deliberately submits a bill to Medicaid and, thereby, effectively causes Medicaid to pay for, a prescription that is both off-label and unapproved by any of the compendia is open to a charge of Medicaid fraud.  Medicaid, incidentally, is the US government’s health insurance system for poor people.  Eligibility is based on income.

Under the False Claims legislation, the physician writing the prescription and the pharmacist who fills it are both open to charges.

Between 2004 and 2008, Jennifer-King Vassel, MD, a child psychiatrist, reportedly wrote prescriptions for psychotropic drugs for N.B. (a minor).  In 2012, Toby Watson, PsyD, Clinical Psychologist, obtained a copy of N.B.’s medical record from N.B.’s mother.  Through an examination of the record, Dr. Watson established that there had been 49 prescriptions that met the false claim criteria outlined above.

Under whistle-blower status, Dr. Watson filed suit against Dr. King-Vassel for Medicaid fraud, on behalf of the U.S. government.  Such a procedure is fairly common, and would make Dr. Watson eligible for a share of any fraudulently obtained money that was recouped as a result of the suit.

However, the suit was summarily dismissed by the trial court on the grounds that Dr. Watson had not provided any expert witnesses to confirm that the prescribing was off-label and undendorsed by any of the official compendia.

The appeals court, however, on August 28 of this year, reversed the lower court’s finding, on the grounds that an expert witness is not necessary to determine if a drug is listed for a certain purpose in a pharmaceutical reference book.  You can see the ruling (No. 12-3671)  by the US Court of Appeals for the Seventh Circuit here.

So the case can now go ahead.

I think the case is important, because it is clear that psychiatry will never be dissuaded from its spurious and destructive practices by rational or ethical argument.  Journalists such as Robert Whitaker have made great strides in exposing and publicizing the abusive and disempowering face of psychiatry.  Numerous counselors, psychologists, social workers, and other professionals (and even some psychiatrists) have written volumes marshalling arguments and data, and presenting proven and convincing alternatives to the facile drugs-for-all-forever psychiatric creed.  But psychiatry has dug its heels in, and in fact, without a trace of compunction or hesitation, has increased the number of fictitious illnesses, lowered thresholds, and is routinely prescribing neuroleptics to children to control temper tantrums, and to elderly people in nursing homes to control “difficult” behavior.

Psychiatrists, with their cozy, corrupt ties to the pharmaceutical industry, have become so intoxicated by their own rhetoric and so buoyed by their marketing success that they have lost all sense of restraint, and perhaps even all sense of decency.  And with DSM-5, they have made it clear that as far as they are concerned, it’s full speed ahead – today America, tomorrow the World!

They will only stop when they are made to stop!

For this reason, I support these whistle-blower lawsuits, and I hope we see more of them in the coming years.

Incidentally, there’s a group called PsychRights – Law Project for Psychiatric Rights.  It’s a non-profit group, incorporated in Alaska.  Their purpose is “…to undertake a coordinated, strategic, legal effort seeking to end the abuses against people diagnosed with mental illness through individual legal representation.”  They also stress “…the necessity of educating the public about the truth and creating alternatives to the all drug, all the time mental illness system.”

PsychRights have made “…the massive psychiatric drugging of children and youth, especially poor, disadvantaged children…” a priority.  And who could argue with that?

Thanks to Becky on Twitter, and Mad in America, for the link to the court ruling.

  • Becky

    Prescribing neuroleptic drugs to children is not new, they were marketed for use in children from the very beginning. Bonker’s Institute of Nearly Genuine Research has some of the ads:

  • Jim Gottstein

    Thanks Phil for writing about this. I am the lawyer who developed the approach and handled the appeal before the 7th Circuit.

    I thought I would clarify one thing, which is that it is causing Medicaid to pay for prescriptions that are not covered that are the false claims.

    The psychiatrists are the witting or unwitting lackeys of the drug companies in the fraudulent scheme depicted at, sacrificing the health and well-being of the vulnerable children on the alter money.

    We are encouraging other people to bring with knowledge of this type of false claim to contact us for possible participation in other lawsuits. Information about the approach can be found at

  • Phil_Hickey


    Thanks for coming in. You’re right, it’s not entirely new, but has taken off since 1995. Thanks for the link to bonkers institute.

  • Phil_Hickey


    Thanks for your comment. I’ve amended the post appropriately, and your flow chart makes the matter clear. I appreciate the work that you and PsychRights are doing in this important area.