Drug Rehab ‘Cult Leader’ Settles Medical Malpractice Case for $6.5M

Carriers agree to pay just as jury hands up verdict in Hudson County. Three carriers have agreed to pay almost $6.5 million to a woman who spent nearly 13 years — from age 13 to 26 — as a virtual prisoner of drug rehabilitation guru ***. The final piece of the settlement came on July 9, after three weeks of testimony during a Hudson County Superior Court trial, just as the jury had handed up its verdict. The verdict was not read and Judge *** dismissed the jury. Two of the medical malpractice carriers had actually already settled, but the third, ***, declined and went to trial in *** v. Kids of North Jersey, ***. The lawyer for ***, ***, decided at the 11th hour to pay $2.3 million rather than roll the dice with the eight-person jury, which had peppered *** with a barrage of tough questions — through the judge — after his cross-examination. *** and his wife, ***, operated Kids of North Jersey in Hackensack, and later in Secaucus, from 1984 to 1999. The rehabilitation center was ultimately closed down when state officials cut off *** Medicaid payments and sued him for $1 million in overbillings. *** was also a defendant and testified. The plaintiff’s lawyer, ***, had previously negotiated separate settlements with ***, *** and *** for three of the psychiatrists that *** employed as his “medical directors” through the years. Those settlements totaled $2,525,000. According to testimony at trial and the depositions of the doctors, the psychiatrists never treated the patients or made diagnoses. The complaint alleged that *** was simply renting their licenses and signatures, which were often used by untrained staffers via rubber stamps to file for private and Medicaid insurance claims. ***, along with partner *** of Newark’s ***, had also settled before trial with *** on behalf of Kids of North Jersey and several related corporations. *** was responsible for 42 percent of any verdict or settlement, while *** was responsible for the remaining 58 percent. *** agreed to pay $1,672,000 to ***, who was a seventh grader when her mother signed her into the rehabilitation facility for unspecified compulsive behavior problems. ***, who has been tracking *** and his bizarre treatment methods for five years, won a $4.5 million settlement in January 2000 for another patient who, like *** and many others, claimed that she couldn’t get out of KIDS even after she was 18. In that case, *** v. KIDS of North Jersey, ***, *** said in court papers that he would argue at trial that *** was not only a charlatan and insurance fraud artist but also a cult leader. In the *** trial, *** presented witnesses who said they were brainwashed, but he assiduously avoided using the word cult, saying in an interview that he did not want to risk turning the trial into a debate about the definition of a cult. He did say in his opening, though, that the *** were “creating a new family with *** as the father and *** as the mother.” The testimony, along with prior depositions and televised interviews by former patients, described a hellish facility run by fear, intimidation and manipulation and sometimes included beatings, humiliation and even kidnappings of those who managed to get out. KIDS billed itself as a facility that not only handled teenagers with drug and alcohol abuse problems, but eating disorders and any compulsive behavior, with *** claiming to be an expert in dealing with such behaviors. His top credential was a Ph.D. in “public administration and urban anthropology” from a “self-directed” school with no classes and with most of the work mailed in. State officials in California, Utah and Texas also shut down his operation, and criminal probes were begun in Florida and New Jersey, though *** was never the subject of prosecution. In addition to the $11 million won in the *** and *** settlements by ***, three other verdicts or settlements against *** and his operation in other states during the 1990s bring the total payout by his carriers to $12.34 million. ***, who was a victim of sexual abuse by her brother but was not diagnosed as an incest victim until being in Kids for six years, finally bolted from the program in August 1997. The *** still live in Madeira Beach, Fla., where *** has unsuccessfully run for Congress and mayor. He is now in personal bankruptcy. The *** and KIDS were represented at the trial by ***. He did not return calls requesting comment.