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by Pam Zekman
CHICAGO (CBS) ― Federal laws require that nursing homes provide services for patients with serious psychiatric problems. To comply many homes now send patients to so-called psych centers.

But the 2 Investigators found that these psych centers are unlicensed and some have psyched out the system administered by the state.

As CBS 2 Investigator Pam Zekman reports, the taxpayers lose and so do the patients.

We watched hundreds of nursing home patients arrive by Medicar and bus to psych centers in the city and suburbs, some traveling an hour and a half a day.

The state's independent watchdog for the disabled, Equip for Equality, has said for years that many centers have failed to deliver the mental health services taxpayers are paying for.

"These are people who are essentially ripping off the system and they are ripping off the public," said Zena Naiditch of Equip for Equality.

Two such businesses were run by Bharat Lalwani and his wife, Anita.

He owns Chicago Medicar. Medicaid paid the company more than $5 million last year, in part for service to psych centers.

She owns Medex Management, which operates four psych centers. She estimates her company collected about $4 million from the government last year.

A CBS 2 investigation found that state regulations are so vague companies like Medex can milk Medicaid for millions of dollars. Regulations that do exist are ignored.

That's why a former Medex employee says he quit and became a whistleblower for the government.

"There were certain days that the physicians weren't present but the billing occurred anyway. And that's just clearly fraudulent," the former employee said.

Medex claims its therapy is provided by "highly trained mental health professionals."

"That's not what we found. What we found were individuals who were described as possibly having high school diplomas – those are the folks that run the sessions," said Equip for Equality's Deborah Kennedy.

Doctors Benjamin and Solomon Okai, twins who specialize in internal medicine, are supposed to run therapy sessions at two Medex psych centers.

But investigators found the doctors only attended two of the six sessions they observed.

Dr. Solomon Okai did show up at another.

"Dr. Okai opened the door to the group room about five minutes after it started, smiled and left," Kennedy said.

Dr. Solomon Okai is a busy man. He works at a West Loop rehab center two mornings a week when he's supposed to be at Medex.

When reminded that according to state rules, the doctor has to be physically present during therapy sessions to bill for therapy, and it is fraudulent if not, he responded that he did not think that was necessarily the case.

"Pam, I think the state understands that a doctor can't really be there all the time," Dr. Solomon Okai said.

When he is not there, he says facilitators can handle it.

"It's just like babysitting," he said. "Adult sitting. Adult baby sitting."

When reminded the taxpayers are paying for psychotherapy and other psychiatric services, Okai said, "Pam, I didn't, this is not something, I 'm not doing this by myself. In fact we are not rendering any psych treatment. No."

Most of the patients' four-hour stay is spent playing games, watching television and eating.

But records CBS 2 Investigators obtained show that last year Medex billed and received $1.6 million from Medicaid and Medicare for services from the Okai twins' practice.

Of that Medex then pays them each a $78, 000 salary and keeps the rest for expenses.

"It's outrageous. It's absolutely appalling," Naditch of Equip Equality said.

Appalling she says because patients could get out of nursing homes if they got the services they need.

"What little money we are devoting to mental health services are being spent not on quality services but are being totally wasted," she said. "It's absolutely outrageous."

The Lalwanis deny using fraudulent billing practices and say Medex only cleared about $200,000 last year.

But now, in response to 2 Investigators' inquiries, the Illinois Department of Healthcare is calling psych centers like these illegitimate, and told CBS 2, "If they continue to operate improperly, we are coming after them."

(© MMVII, CBS Broadcasting Inc. All Rights Reserved.)