Residential Programs: Selected Cases of Death, Abuse, and Deceptive Marketing
Published: 2008-04-24T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In October 2007, GAO testified before the Committee regarding allegations of abuse and death in private residential programs across the country such as wilderness therapy programs, boot camps, and boarding schools. GAO also examined selected closed cases where a youth died while enrolled in one of these private programs. Many cite positive outcomes associated with specific types of residential programs. However, due to continuing concerns about the safety and well-being of youth enrolled in private programs, the Committee requested that GAO (1) identify and examine the facts and circumstances surrounding additional closed cases where a teenager died, was abused, or both, while enrolled in a private program; and (2) identify cases of deceptive marketing or questionable practices in the private residential program industry. To develop case studies of death and abuse, GAO conducted numerous interviews and examined documents from eight closed cases from 1994 to 2006. GAO used covert testing along with other investigative techniques to identify, for selected cases, deceptive marketing or questionable practices. Specifically, posing as fictitious parents with fictitious troubled teenagers, GAO called 14 programs and related services. GAO did not attempt to evaluate the benefits of private residential programs and its results cannot be projected beyond the specific programs and services that GAO reviewed.
section_title: What GAO Found
paragraphs: In the eight closed cases GAO examined, ineffective management and operating practices, in addition to untrained staff, contributed to the death and abuse of youth enrolled in selected programs. The practice of physical restraint also figured prominently in three of the cases. The restraint used for these cases primarily involved one or more staff members physically holding down a youth. Posing as fictitious parents with fictitious troubled teenagers, GAO found examples of deceptive marketing and questionable practices in certain industry programs and services. For example, one Montana boarding school told GAO's fictitious parents that their child must apply using an application form before they are admitted. But after a separate call, a program representative e-mailed an acceptance letter for GAO's fictitious child even though an application was never submitted. In another example, the Web site for one referral service states: "We will look at your special situation and help you select the best school for your teen with individual attention." However, GAO called this service three times using three different scenarios related to different fictitious children, and each time the referral agent recommended a Missouri boot camp. Investigative work revealed that the owner of the referral service is married to the owner of the boot camp. GAO also called a program established as a 501(c)(3) charity that advocated a potentially fraudulent tax scheme. The scheme involves the friends and family of a child making tax-deductible "donations" to the charity, which are then credited to an account in the program the child is enrolled in. GAO referred this charity to the Internal Revenue Service for criminal investigation.

section_title: Letter
paragraphs: Thank you for the opportunity to continue the discussion of private  residential programs for troubled youth that we began last fall. In the  context of this and our prior testimony, we are using the term residential  program to refer to those private entities across the country and abroad  that call themselves wilderness therapy programs, therapeutic boarding  schools, academies, behavioral modification facilities, ranches, and boot  camps, among other names. Many of these programs are privately owned  and operated. Private residential programs typically market their services  to the parents of troubled teenagers—boys and girls with a variety of  addiction, behavioral, and emotional problems—and provide a range of  services, including drug and alcohol treatment, confidence building, and  psychological counseling for illnesses such as depression and attention  deficit disorder. Parents trying to help their troubled child may also seek  help from referral services and educational consultants, which generally  purport to assess the needs of the child and recommend an appropriate  program.
Many cite positive outcomes associated with specific types of residential  programs. However, in our previous testimony, we identified thousands of  allegations of abuse, some of which resulted in death, at residential  programs across the country and in American-owned and American- operated facilities abroad. We also examined 10 closed civil or criminal  cases where a teenager died while enrolled in a private program and found  significant evidence of ineffective management in most of the 10 cases,  with program leaders neglecting the needs of program participants and  staff. This ineffective management compounded the negative  consequences of (and sometimes directly resulted in) the hiring of  untrained staff; a lack of adequate nourishment for enrolled children; and  reckless or negligent operating practices, including a lack of adequate  equipment.
Due to your continuing concern about the safety and well-being of youth  enrolled in private residential programs, and to assist the Committee in its  consideration of the need for federal legislation in this area, you requested  that we (1) identify and examine the facts and circumstances surrounding  additional closed cases where a teenager died, was abused, or both, while  enrolled in a private program; and (2) identify cases of deceptive  marketing or other questionable practices in the private residential  program industry.
To identify case studies, we reviewed numerous closed criminal or civil  cases in which a court or state agency was asked to decide whether a  private residential program was responsible for the death or abuse of an  enrolled teenager. We also reviewed administrative cases where state  agencies made rulings regarding the death or abuse of a teenager. When  identifying cases, we specifically excluded public programs such as state- sponsored foster programs, juvenile justice programs for delinquent youth,  or programs that exclusively treat psychological disorders or substance  abuse in a hospital setting. We also excluded cases related to the programs  we examined for our October 10, 2007, testimony. We focused on deaths  or instances of abuse between the years 1994 and 2006 to illustrate the  long-standing issues presented by private residential programs. We limited  our cases to closed criminal cases and, thus, did not include ongoing cases  from the last several years. We selected eight cases—four cases of death  and four cases of abuse—based on several factors including the victim’s  age, the program location, the type of program the victim attended, and  the date of death or abuse. We then examined, in more detail, the facts and  circumstances of the case. To validate the facts and circumstances, and to  the extent possible, we conducted interviews with related parties,  including current and former program staff and officials, attorneys and law  enforcement officials involved in the cases, and the parents of the victims.  Further, we reviewed available documentation to support the facts of each  case including, but not limited to, marketing materials, police reports,  autopsy reports, and state agency oversight reviews and investigations.
To identify cases of deceptive marketing or other questionable practices in  the private residential program industry, we used a variety of approaches  and investigative techniques. Posing as fictitious parents with fictitious  troubled children, our undercover investigators made telephone calls to a  nonrepresentative selection of 10 private residential programs and 4  referral services. Like legitimate parents with troubled teenagers, we  identified these programs and referral services through Internet searches  and magazine advertisements. To assess the accuracy and reasonableness  of the information we obtained during each undercover call, we performed  additional follow-up work that included, but was not limited to, making  additional undercover calls; comparing the information we received with  other marketing information provided by the program; reviewing relevant  laws, regulations, and trade organization statements; performing  announced, agreed upon site visits (i.e., not undercover); and speaking  with cognizant state and federal officials, including the Internal Revenue  Service (IRS).
We performed our work from November 2007 through April 2008 in  accordance with the quality standards for investigations set forth by the  President’s Council on Integrity and Efficiency. As we noted in our prior  testimony, it is important to emphasize that residential programs are  intended to help youth with serious problems, including life-threatening  addictions and diseases. We did not attempt to evaluate the benefits of  residential programs in dealing with these serious problems. In addition, it  is not possible to generalize the results of our investigation as applying to  all residential programs, whether privately or publicly funded, or referral  services and educational consultants and others in the residential program  industry. Moreover, it is difficult to develop a picture of the overall  industry, its practices, and efforts to oversee it. For example, while states  often regulate publicly funded programs, a number of states do not license  or otherwise regulate certain types of private programs. GAO is  completing a more comprehensive review of state and federal oversight of  residential programs and expects to issue a report soon.
subsections: section_title: Background
paragraphs: Since the early 1990s, state agencies and private companies have set up  hundreds of residential programs and facilities in the United States. Many  of these programs are intended to provide a less restrictive alternative to  incarceration or hospitalization for youth who may require intervention to  address emotional or behavioral challenges. A wide array of government  or private entities, including government agencies and faith-based  organizations, operate these programs. Some residential programs  advertise themselves as focusing on a specific client type, such as those  with substance abuse disorders or suicidal tendencies.
As we reported in our October 2007 testimony, no federal laws define what  constitutes a residential program, nor are there any standard, commonly  recognized definitions for specific types of programs. For our purposes,  we define programs based on the characteristics we have identified during  our work. For example:    Wilderness therapy programs place youth in different natural  environments, including forests, mountains, and deserts. According to  wilderness therapy program material, these settings are intended to  remove the “distractions” and “temptations” of modern life from teens,  forcing them to focus on themselves and their relationships. These  programs are typically 28 days in length at a minimum, but parents can  continue to enroll their child for longer at an additional cost.
Boot camps are residential programs in which strict discipline and  regime are dominant principles. Many boot camps emphasize  behavioral modification elements, and some military-style boot camps  also emphasize uniformity and austere living conditions. Boot camps  might be included as part of a wilderness therapy school or therapeutic  boarding, but many boot camps exist independently. These programs  are offered year-round and some summer programs last up to 3  months.
Boarding schools (also called academies) are generally advertised as  providing academic education beyond the survival skills a wilderness  therapy program might teach. These programs frequently enroll youth  whose parents force them to attend against their will. The schools can  include fences and other security measures to ensure that youth do not  leave without permission. While these programs advertise year-round  education, the length of stay varies for each student; contracts can  require stays of up to 21 months or more.
Ranch programs typically emphasize remoteness and large, open  spaces available on program property. Many ranch programs advertise  the therapeutic value of ranch-related work. These programs also  generally provide an opportunity for youth to help care for horses and  other animals. Although we could not determine the length of a typical  stay at ranch programs, they operate year-round and take students for  as long as 18 months.
See appendix I for further information about the location of various types  of residential programs across the United States. In addition to these  programs, the industry includes a variety of ancillary services. These  include referral services and educational consultants to assist parents in  selecting a program, along with transport services to pick up a youth and  bring him or her to the program location. Parents frequently use a  transport service if their child is unwilling to attend the program.
Private programs generally charge high tuition costs. For example, one  wilderness program stated that their program costs over $13,000 for 28  days. In addition to tuition costs, these programs frequently charge  additional fees for enrollment, uniforms, medical care, supplemental  therapy, and other services—all of which vary by program and can add up  to thousands of extra dollars. Costs for ancillary services vary. The cost  for transport services depends on a number of factors, including distance  traveled and the means of transportation. Referral services do not charge  parents fees, but educational consultants do and typically charge  thousands of dollars. Financial and loan services are also available to  assist parents in covering the expense of residential programs and are  often advertised by programs and referral services. See appendix II for  further information about the cost of residential programs across the  United States.
There are no federal oversight laws—including reporting requirements— pertaining specifically to private residential programs, referral services,  educational consultants, or transportation services, with one limited  exception. The U.S. Department of Health and Human Services oversees  psychiatric residential treatment facilities (PRTFs) receiving Medicaid  funds. In order to be eligible to receive funds under Medicaid, PRTFs must  abide by regulations that govern the use of restraint and seclusion  techniques on patients. They are also required to report serious incidents  to both state Medicaid agencies and, unless prohibited by state law, state  Protection and Advocacy agencies. In addition, the regulations require  PRTFs to report patient deaths to the Centers for Medicare and Medicaid  Services Regional Office.
section_title: Cases of Death and Abuse at Selected Residential Programs
paragraphs: In the eight closed cases we examined, ineffective management and  operating practices, in addition to untrained staff, contributed to the death  and abuse of youth enrolled in selected programs. Furthermore, two cases  of death were very similar to cases from our October 2007 testimony, in  that staff ignored the serious medical complaints of youth until it was too  late. The practice of physical restraint figured prominently in three of the  cases. The restraint used for these cases primarily involved one or more  staff members physically holding down a youth. Ineffective operating  practices led to the most egregious cases of death and abuse, as the cases  exposed problems with the entire operation of the program. Specifically,  the failure of program leaders to ensure that appropriate policies and  procedures were in place to deal with the serious problems of youth;  ineffective management practices that led to questionable therapeutic or  operational practices; and the failure of the program to share information  about enrolled youth with the staff members who were attending to them  created the environments that resulted in abuse and death. Moreover, in  cases involving abuse, the abuse was systemic in the program and not  limited to the incident discussed in our case studies. In three of the eight  cases we examined, the victim was placed in the program by the state or in  consultation with state authorities.
See table 1 for a summary of the cases of death we examined.
See table 2 for a summary of the cases of abuse we examined. For  reporting purposes, we continue the numbering of case studies in this  table, starting with five.
The following three narratives describe selected cases in further detail.
subsections: section_title: Case 3 (Death)
paragraphs: The victim, who died in 2005, was a 12-year-old male. Documents obtained  from the Texas Department of Family and Protective Services indicate that  the victim had a troubled family background. He was taken into state care  along with his siblings at the age of 6. According to child protective service  workers who visited the family’s home, the victim and his siblings were  found unsupervised and without electricity, water, or food. Some of the  children were huddled over a space heater, which was connected to a  neighbor’s house by extension cord, in order to keep warm. As a ward of  the state, the victim spent several years in various foster placements and  youth programs before being placed in a private residential treatment  center in August 2005. The program advertised itself as a “unique facility”  that specialized in services for boys with learning disabilities and  behavioral or emotional issues. The victim’s caretakers chose to place him  in this program because he was emotionally disturbed. Records indicate  that he was covered by Medicaid.
On the evening of his death, the victim refused to take a shower and was  ordered to sit on an outside porch. According to police reports, the victim  began to bang his head repeatedly against the concrete floor of the porch,  leading a staff member to drag him away from the porch and place him in  a “lying basket restraint” for his own protection. During this restraint, the 4  feet 9½ inch tall, 87-pound boy was forced to lie on his stomach with his  arms crossed under him as the staff member, a muscular male 5 feet 10  inches tall, held him still. Some of the children who witnessed the restraint  said they saw the staff member lying across the victim’s back. During the  restraint, the victim fought against the staff member and yelled at him to  stop. The staff member told police that the victim complained that he  could not breathe, but added that children “always say that they cannot  breathe during a restraint.” According to police reports, after about 10  minutes of forced restraint, the staff member observed that the victim had  calmed down and was no longer fighting back. The staff member slowly  released the restraint and asked the victim if he wanted a jacket. The  victim did not respond. The staff member told police he interpreted the  victim’s silence as an unwillingness to talk due to anger about the  restraint. He said he waited for a minute while the victim lay silently on  the ground. When the victim did not respond to his question a second time,  he tapped the victim on the shoulder and rolled him over. The staff  member observed that the victim was pale and could not detect a pulse.  All efforts to revive the victim failed, and he was declared dead at a nearby  hospital.
When the staff member demonstrated his restraint technique for the  police, they found that his technique violated the restraint policies of the  program. These policies prohibited staff from placing any pressure on the  back of a person being restrained. The report added that this staff member  was reprimanded for injuring a youth in 2002 as a result of improper  restraint. After this incident, program administrators banned the staff  member from participating in restraints for 1 month. The reprimand issued  by program administrators over this incident noted that the staff member  had actually trained other staff members in performing restraints, making  the matter more serious. The police reports also cite one of the staff  member’s performance evaluations that noted that he had problems with  his temper. According to the reports, one of the youth in the program said  the staff member could become agitated when putting youth in restraint.
Although the Texas Department of Family and Protective Services alleged  that the victim’s death was due to physical abuse, the official certificate of  death stated that it was an accident and a grand jury declined to press  charges against the staff member performing the restraint. However, the  victim’s siblings obtained a civil settlement against the program and the  staff member for an undisclosed amount. The program remained open  until May 2006, when a 12-year-old boy drowned on a bike outing with the  program. According to records from law enforcement, child protection  workers, and the program, the boy fell into the water of a rain-swollen  creek and was sucked into a culvert. He died after several weeks on life  support. The Texas Department of Family and Protective Services cited  negligent staff supervision in its review of this second death and revoked  the program’s license to operate as a residential treatment center.  However, the program’s directors also ran a summer camp for children  with learning disabilities and social disorders licensed by the Texas  Department of State Health Services, until they resigned from their  positions in March 2008.
section_title: Case 4 (Death)
paragraphs: The victim was 16 years old when he died, in February 2006, at a private  psychiatric residential treatment facility in Pennsylvania for boys with  behavioral or emotional problems. He was a large boy—6 feet 1 inch in  height and weighing about 250 pounds—and suffered from bipolar  disorder and asthma. The cost for placement in this facility was primarily  paid for by Medicaid.
According to state investigative documents we obtained, the victim was  placed in intensive observation after he attempted to run away. As part of  the intensive observation, he was forced to sit in a chair in the hallway of  the facility and was restricted from participating in some activities with  other residents. On the day of his death, staff allowed the victim to  participate in arts, crafts, and games with the other youth, but would not  let him leave the living area to attend other recreational activities. Instead,  staff told the victim that he would have to return to his chair in the  hallway. In addition, staff told him that he would have to move his chair so  that he could not see the television in another room. The victim complied,  moving his chair out of view of the television, but put up the hood of his  sweatshirt and turned his back toward the staff. The staff ordered him to  take down his hood but he refused. When one of the staff walked up to  him and pulled his hood down, the victim jumped out of his chair and  made a threatening posture with his fists, saying he did not want to be  touched. The staff member and two coworkers then brought the victim to  another room and held him facedown on the floor with his arms pulled up  behind his back. The victim struggled against the restraint, yelling and  trying to kick the three staff members holding him down. After about 10  minutes, the victim became limp and started breathing heavily. He  complained that he was having difficulties breathing. One staff member  unzipped his sweatshirt and loosened the collar of his shirt, but rather  than improve, the victim became unresponsive. The staff called emergency  services and began CPR. The victim was taken by ambulance to a hospital,  where he died a little more than 3 hours later. In the victim’s autopsy  report his death was ruled accidental, as caused by asphyxia and an  abnormal heartbeat (cardiac dysrhythmia).
Following the victim’s death, an investigation by the Pennsylvania  Department of Health found that the policies and procedures for youth  under intense observation do not prohibit them from watching television,  nor do they require that youth keep their face visible to staff at all times.  The investigation also found that the facility had documentation of the  victim’s history of asthma, and that its training manual for restraint  procedures cautioned against the risk of decreased oxygen intake during  restraints for children with asthma. However, all three staff members  involved in the restraint told investigators that they were unaware of any  medical conditions that needed to be considered when restraining the  victim. In addition, the investigation found that the facility did not provide  timely training on the appropriate and safe use of restraint. The state’s  Protection and Advocacy organization, Pennsylvania Protection &  Advocacy, Inc. (PP&A), conducted its own investigation of the facility and  found that staff members inappropriately restrained children in lieu of  appropriate behavioral interventions, which resulted in neglect and abuse.  Of the 45 residents interviewed by PP&A investigators, 29 said that staff at  the facility subjected them to restraints. The residents reported that the  restraints could last as long as 90 minutes and caused breathing  difficulties. They also stated that staff often placed their knees on  residents’ backs and necks during restraints. One resident reported that  the blood vessels in his eyes “popped” during a restraint. Another resident  said that his nose hit the ground during the restraint, causing him to choke  on his own blood. Further, some of the residents reported that staff  provoked them and that staff did not make any effort to de-escalate the  provocations before implementing a restraint.
No criminal charges were filed in regard to the victim’s death. The victim’s  mother filed a civil suit over her son’s death against the facility, which is  currently pending. Her son’s death was not the only fatal incident at this  facility. Only 2 months before the victim’s death, in December 2005, a 17- year-old boy collapsed at the facility after a physical education class, and  later died at a nearby hospital. His death was attributed to an enlarged  heart. This facility remains open.
section_title: Case 5 (Abuse)
paragraphs: This abuse victim was sent to a private drug and addiction treatment  program in July 1994 at the age of 14. He was attending public school in  the major metropolitan area where his family lived. The abuse victim told  us that he had problems at school, including poor grades, truancy, a fight  with other students, and that he had been suspended. After the victim was  questioned by police about an assault on a girl at his school, a family  friend with ties to the behavior modification program recommended the  program to the victim’s parents. According to the victim, his first visit to  the school turned into an intense intake session where he was interviewed  by two program patients. Although the victim denied using drugs, the  interviewers insisted that he was not being honest. After about 6 hours of  questioning, the victim told the interviewers what he thought they wanted  to hear—that he was smoking pot, did cocaine, and cut school to get  high—so that he could end the interview. The interviewers used these  statements to convince the victim’s parents to sign him into the program  for immediate intervention and treatment. He ended up staying in the  program for the next 4 years—even after he turned 18 and was held  against his will.
According to program records, the program’s part-time psychiatrist did not  examine or diagnose him until he had been in the program for 14 days.  This lack of psychological care continued, as program records indicate he  was examined by the psychiatrist only four times during his entire stay. He  was restrained more than 250 times while in the program, with at least 46  restraints lasting one hour or longer. The victim said some restraints were  applied by a group of four or five staff members and fellow patients.
According to the victim, they held him on his back, with one person  holding his head and one person holding each limb. These restraints were  imposed whenever the victim showed any reluctance to do what he was  told, or, the victim told us, for doing some things without first obtaining  permission from program staff. On one occasion, while he was staying  with a host family and other patients, he attempted to escape from the  program. The victim claims that they restrained him by wrapping him in a  blanket and tying him up. According to the victim, when he turned 18, he  submitted a request to leave the program but his request was denied  because he had not followed the proper procedure and was a danger to  himself. For expressing his desire to leave the program, he was stripped of  all progress he had made to that point, and was prevented from further  advancing until the program director decided he was be eligible. Incident  reports filed by program staff document that after he had turned 18, the  victim was restrained on 26 separate days, with at least two restraints  lasting more than 12 hours.
According to program rules, failure of the parents to follow program rules  and fully support and participate in the program would jeopardize their  son’s treatment and progress and put him at risk of expulsion. Having been  led to believe that the program was the only way to help him overcome his  alleged addictions and problems, his family complied with the program’s  demands. Moreover, the program required parents and siblings over age 8  to attend twice weekly group therapy meetings. According to the victim,  these meetings lasted for many hours, sometimes stretching into the early  morning. He added that when the victim’s father refused to attend the  therapy meetings for fear of losing his job, the program told him to quit.  When he would not quit his job or miss work to attend the meetings, the  victim said that the program convinced his mother to leave her husband.  After his parents separated, the program would not allow the victim to  have contact with his father. The victim said that the program never told  the victim’s family that all the drug tests they performed on him returned  negative results, including the initial tests done when he entered the  program.
In February 1998, the State of New Jersey terminated the program’s  participation in the Medicaid program, holding that the program did not  qualify as a children’s partial care mental health program because of its  noncompliance with client rights standards and its failure to meet various  staff requirements, such as staff-to-client ratios and requisite education  and experience levels for staff. The program subsequently closed in  November 1998, citing financial problems. About a year later, in  September 1999, an administrative law judge rejected an appeal by the  program to overrule the state’s termination of its Medicaid participation.  The judge noted in his decision that the program effectively operated as a  full-time residential facility. Moreover, he noted that all group staff at the  program were either current or former patients, and only two members of  the program staff met the educational requirements to qualify as direct- care professionals.
The victim filed a civil lawsuit against the program, director, and a  psychiatrist, which resulted in a $3.75 million settlement. Other civil suits  filed by former patients included one patient who was committed to the  program at the age of 13 and spent 13 years in the program. This patient  reached a similar settlement against the program, director, and  psychiatrists for the sum of $6.5 million. In addition, a third former patient  secured a $4.5 million settlement against the program, director, and  psychiatrists.
section_title: Deceptive Marketing and Questionable Practices in Selected Programs and Services
paragraphs: Posing as fictitious parents with fictitious troubled teenagers, we found  examples of deceptive marketing and questionable practices related to 10  private residential programs and 4 referral services. The most egregious  deceptive marketing practices related to tax incentives and health  insurance reimbursement, and were intended to make the high price of the  programs appear more manageable for our fictitious parents. We also  found examples of false statements and misleading representations related  to a range of issues including education and admissions, as well as  undisclosed conflicts of interest. In addition, we identified examples of  questionable practices related to the health of youth enrolled in programs  and the method of convincing reluctant parents to enroll their children.  Although general consumer protection laws apply to these programs and  services, there are no federal laws or regulations on marketing content  and practices specific to the residential program industry.
A link to selected audio clips from these calls is available at:  http://www.gao.gov/media/video/gao-08-713t/. See table 3 for a selection of  representations made by programs and referral agents.
Case 1: One of our fictitious parents called this foundation pretending to  be a parent who could not afford the cost of a residential program for his  child. A representative of the foundation explained that their “most  popular” method of fund-raising involved the friends and relatives of the  enrolled youth making tax-deductible donations to the foundation, which  in turn credited 90 percent of these “donations” specifically to pay for  tuition in a program the child was attending. The foundation assigns a  code number to each child, which parents ensure is listed on the donation  checks. The representative also provided a fund-raising packet by mail  that instructs the parents of troubled teens: “You are able to contact  family, friends, business acquaintances, affiliates, churches, and  professional/fraternal organizations that you know. Don’t forget corporate  matching funds opportunities from your employer too.” The packet also  included two template letters to send in soliciting the funds. According to  an IRS official with the Tax Exempt and Governmental Entities Division,  this practice is inappropriate and represents potential tax fraud on the part  of the foundation. Furthermore, those who claim inappropriate deductions  in this fashion would be responsible for back taxes, as well as penalties  and interest. Based on this information, we referred this nonprofit  foundation to the IRS for criminal investigation.
Case 2: The program representative at a Montana boarding school told  our fictitious parent that they must submit an application form before their  child can be accepted to the school. However, after a separate undercover  call made to this school by one of our fictitious parents, the program  representative e-mailed us stating that our fictitious daughter had been  approved for admission into the program and subsequently sent an  acceptance letter. The acceptance letter stated that our fictitious child  “has been approved for our school here in Montana.” This admission was  based entirely on one 30-minute telephone conversation, in which our  fictitious parent described his daughter as a 13-year-old who takes the  psychotropic medication Risperdal, attends weekly therapy sessions, has  bipolar disorder, and been diagnosed with Reactive Attachment Disorder.  We did not fill out an application form for the school. Moreover, this  program had previously recommended that our fictitious parents seek  advice from the 501(c)(3)foundation discussed in Case 1 to help finance  the cost of the program. It appears that parents do not have assurance  about the integrity of the admissions process at this boarding school.
Case 4: One fictitious parent asked the representative for a Texas  wilderness therapy program whether there was any possibility that a  health insurance company would cover the cost of the program. The  representative replied that, at the completion of the program, the  bookkeeper for the program would generate an itemized statement of  billable charges that could be submitted to an insurance company for  reimbursement. She emphasized that we should not call ahead of time to  seek pre-approval, because then we would be “up the creek.” She added  that this was “just the way insurance companies like it” and stated that  health insurance companies reimburse “quite a bit.” She gave an example  of one insurance company that reimbursed for over $11,000—almost the  entire cost of the 28-day wilderness program. Representatives for both a  health care insurer and a behavioral health company told us that parents  who follow this advice run a real risk of not being reimbursed, especially if  the health insurance company requires pre-approval of counseling or other  mental health services. In this case, our fictitious parent was being led into  believing that a large portion of the tuition for the program would be  covered by health insurance even if pre-approval for the charges was not  obtained in writing in advance of the services.
Case 6: One referral agent we called stated that behavioral modification  schools are “specialty schools” and that tuition costs are tax deductible  under Section 213 of the Internal Revenue Tax code. The referral agent  also stated that transportation costs related to bringing our fictitious child  to and from the school were tax deductible under this section. However,  the two programs recommended by the referral service do not appear to  meet the requirements of IRS regulations for special schools. Our review  of Section 213 of the Internal Revenue Tax code shows that it relates to  medical expenses and specifies that, if medical expenses and  transportation for treatment exceed 7.5 percent of a taxpayer’s adjusted  gross income, the excess costs can be deducted on Schedule A of IRS  Form 1040. Even if these expenses were deductible under this section,  only expenses above 7.5 percent of the adjusted gross income would be  deductible, rather than the full amount as suggested by the referral agent.  An IRS authority on Section 213 with whom we spoke stated that the  referral service provided us with questionable tax advice and that parents  should consult a tax advisor before attempting to claim a deduction under  this section. Parents improperly taking this deduction could be  responsible for back taxes, as well as penalties and interest.
Case 9: On its Web site, referral service “B” invites parents to call a toll- free number and states: “We will look at your special situation and help  you select the best school for your teen with individual attention.” Our  undercover investigators called this referral service pretending to be three  separate fictitious parents and described three separate fictitious children  to the agents who answered the phone. Despite these three different  scenarios, we found the referral service recommended the same  residential program all three times—a Missouri boot camp. Our  investigation into this referral service revealed that the owner of the  referral service is the husband of the boot camp owner. This relationship,  was not disclosed to our fictitious parents during our telephone calls,  which raises the issue of a potential conflict of interest. It appears that  parents who call this referral service will not receive the objective advice  they expect based on marketing information on the Web site.
Mr. Chairman and Members of the Committee, this concludes my  statement. We would be pleased to answer any questions that you may  have at this time.
section_title: Contacts and Acknowledgments
paragraphs: For further information about this testimony, please contact Gregory D.  Kutz at (202) 512-6722 or kutzg@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this testimony.
section_title: Appendix I: Private Residential Program Locations
paragraphs: In our examination of case studies for this testimony and our prior  testimony, we found that the victims of death and abuse came from across  the country and attended programs that were similarly located in  numerous states. Figure 1 contains a map indicating where victims lived  and the location of the program they attended.
Private residential programs are located nationwide and rely heavily on  the Internet for their marketing. Although Web sites list 48 of the 50 states  where parents can find various types of programs, we found that they do  not list programs in Nebraska and South Dakota, nor do they indicate the  existence of programs in the District of Columbia. Notably, we did not find  Web sites that list states with boot camps but instead instruct parents to  call for locations and details. Figure 2 illustrates the types of programs and  the states in which they are located, excluding boot camps.
section_title: Appendix II: Cost of Private Residential Programs
paragraphs: Our undercover calls to selected programs revealed that most private  programs charge a high tuition for their services. Table 4 contains  information related to the high cost of these programs based these phone  calls.
According to program and service representatives with whom we spoke,  the basic cost could be discounted. For example, one program told us if  parents paid for a full year upfront, they would be given a $200-per-month  discount. This does not include fees by transport services for taking a  child to a program. Moreover, although program and service  representatives quoted these as basic program costs, they also mentioned  additional one-time charges, such as an enrollment fee that can be as  much as $4,600, uniform costs, or other items such as supplies. In addition,  some programs charge extra for therapy, including one-on-one therapy.
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