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Psychologist Judith Peterson Indicted by Federal Grand Jury

Glenview, Illinois
ISSD has learned of a pending legal development which could have a chilling effect on the provision of health care in the United States and is unprecedented in Federal criminal law. Although proponents of the so-called "false memory syndrome" will undoubtedly embrace this development as a governmental endorsement of their point of view, the underlying issues are different and more disturbing.

Texas psychologist and former ISSD member Judith Peterson will be indicted as early as today by a Federal grand jury on charges of criminal insurance fraud, mail fraud, and other unknown charges. If she is found guilty, these charges carry a mandatory prison sentence in a Federal penitentiary.

The prosecutor's allegations against Dr. Peterson reportedly state that Dr. Peterson falsely and intentionally created and diagnosed Dissociative Identity Disorder (DID) and intentionally implanted false memories in these patients in order to keep patients in the hospital longer, thereby providing fraudulent therapy for traumas that never occurred.

Dr. Peterson will also be charged with mail fraud because she mailed bills for these allegedly fraudulent services. Since the Federal government has only interviewed retractors, their attorneys and others, and never interviewed Dr. Peterson or other positive witnesses, further charges may be pending. Dr. Peterson is not even entitled to know these charges until she is indicted. Regardless of the outcome, Dr. Peterson is now forced to mount a legal defense that will cost in the high six-figure range; malpractice insurance does not cover the costs of criminal defense.

Allegations of this kind belong in the civil domain, not in criminal court. They are malpractice and negligence complaints. In fact, the people who Dr. Peterson allegedly defrauded have already sued her; their cases were settled out of court. ISSD has not reviewed the specifics of any of these cases, but believes that they have already been dealt with through proper legal channels. The alleged victims of fraud and others filed multiple complaints with the Texas Board of Psychology; the Board has dismissed 11 complaints filed against Dr. Peterson, and has not found against her in _any_ case.

Furthermore, numerous complaints have been filed against her with the Texas Department of Mental Health and Mental Retardation and the Texas Department of Health and she has been found at no fault in every investigation. each complaint was also investigated, per JCOAH guidelines, at the hospital level, and Dr. Peterson was found to be without fault.

By prosecuting Dr. Peterson on charges of this kind, the Federal government is indicating their willingness to set standards for diagnosis and treatment. By criteria not yet known to ISSD, they have decided that Dr. Peterson purposely diagnosed DID when it was not present and purposely created false memories. They have also seemingly decided that the patients' memories were not accurate.

Imagine what will happen when this scenario is generalized to other patients and other professionals. Will any patient who is unhappy with the outcome of any form of therapy be able to allege that purposeful criminal fraudulent therapy was performed and cause a therapist to be indicted? Will the government now seek to imprison doctors treating patients who allege Agent Orange exposure, Gulf War Syndrome, unknowing exposure to government radiation testing, or other events that the government has not wished to acknowledge?

Will mental health providers risk jail time for treating those traumatized by combat activities that the government prefers to deny? Will a physician be subject to prison time for mistakenly diagnosing indigestion in a patient who is having a heart attack? If these things can occur, then what professionals in their right mind will want to remain as providers of health care?

ISSD urges Americans to consider what actions they may wish to take to protect the health care system from criminalization of health care delivery. For example, they may wish to contribute to a legal defense fund that has been established. Providers may also urge their professional associations to investigate the broad issues involved in these allegations so that Dr. Peterson and others do not risk financial ruin and possible prison time for treating patients.

Copyright 1997 Houston Chronicle


5 psychiatric workers charged in scam
Insurance allegedly collected after patients linked to ritual abuse


A psychiatric hospital administrator and four medical practitioners collected millions of dollars in fraudulent insurance payments by convincing patients that they had been involved in ritual abuse, a Houston federal grand jury alleged Wednesday.

The five former employees of Spring Shadows Glen Hospital used "techniques commonly associated with mind control and `brain-washing'" on psychiatric patients, according to a 60-count indictment

The defendants sought to document false diagnoses of multiple- personality disorder in patients with large or unlimited insurance policies, the indictment said.

Using hypnosis, drugs, isolation and unnecessary restraints, grand jurors alleged, the defendants attempted to convince patients that their mental illness resulted from abuse suffered during involvement in a satanic cult.

Patients treated at the hospital in 1992 and 1993 claimed to have "recovered" bizarre memories of cannibalism, torture and human sacrifices.

The defendants also are accused of threatening other hospital employees' jobs in order to coerce them to create or change medical records.

Named in the indictment are George Jerry Mueck, the former hospital administrator of Spring Shadows Glen; psychologist Judith Peterson; psychiatrists Richard Seward and Gloria Keraga; and therapist Sylvia Davis. Although Mueck continues to serve as administrator at the hospital, it is now under different ownership and is called Memorial Spring Shadows Glen.

None of the defendants could be reached Wednesday for comment. The indictment includes one count of conspiracy and 59 counts of mail fraud against each defendant. Each count carries a maximum penalty of five years in prison and a $250,000 fine.

Although dozens of former psychiatric patients have filed civil lawsuits nationwide alleging that their therapists implanted false memories of sexual abuse, authorities said the indictment Wednesday may be the first in which mental-health professionals face criminal charges in connection with patients' false memories.

Assistant U.S. Attorney Larry Eastepp, the prosecutor in the case, acknowledged that the indictment is unique and may be difficult to prosecute because he'll have to prove complex links between the hospital's medical and business operations.

He said the indictment is based on medical records and insurance billings involving seven former Spring Shadows Glen patients.

Eastepp declined comment on a section in the indictment that alleged hospital funds were converted into cashier's checks to pay patient insurance premiums.

In civil court depositions and other records, hospital business personnel -- not among those indicted Wednesday -- acknowledged using hospital funds to pay a few thousand dollars in insurance premiums that brought in several hundred thousand in medical claims.

They denied wrongdoing, and said they wanted to ensure that the patients involved could receive needed treatment.

The Wednesday indictment did not include patients' names.

In August, a federal jury awarded nearly $5.8 million to Lynn Carl, a former Spring Shadows Glen patient who claimed her family was torn apart when her psychotherapy produced false memories of satanic cult abuse.

The judgment is among the largest of several handed down in recent years against therapists accused of implanting false memories of sexual abuse. Many other such suits filed around the country have been settled out of court.

More than a dozen other patients have made similar civil claims involving the former Spring Shadows Glen Hospital.

During the Carl civil trial, Keraga, 44, testified that she didn't know if the specific memories Carl recovered in therapy were true, but said she believed the "gist" of them.

One of Keraga's attorneys, Suzan Cardwell, argued the medical care Keraga provided Carl was a reasonable effort to help the patient work through severe emotional problems.

A civil court trial involving Carl's daughter and son, Kristi and B.J., is scheduled for February in Austin. They also allege that they were falsely convinced they had been involved in cult activity.

Carl said the false memories led to divorce from her husband and a court order preventing her from seeing her children. Carl said she later came to realize the memories were false, and reconciled with her husband and children.

Carl's attorney, Skip Simpson of Dallas, said the criminal indictments should send a message to mental-health practitioners nationwide.

"I think this is a huge warning that anytime a diagnosis is extremely suspicious, don't be surprised that there may not be just a plaintiff's lawyer but also the FBI knocking at the door," Simpson said. "This is particularly true when you have a diagnosis based on outlandish events."