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Long-standing claims that the Eleanor Slater Hospital defrauded Medicaid out of nearly a half-billion dollars by having its fiscal agent, Gainwell Technologies, submit “fraudulent” claims are back on the federal court docket.
And now, the federal government has weighed in with an opinion on the law that lets the case go forward.
What’s behind the lawsuit? Allegations by two former top doctors at the state-run hospital and the former chief financial officer that Gainwell had a central role in a decades-long fraud at the state-run hospital involving bilking Medicaid for up to $100 million a year, while “improperly warehousing, undertreating, and overmedicating … primarily mentally disabled patients.”
The suit alleges almost $500 million in “false” claims between 2016 and 2021 alone.
Gainwell remains the state’s fiscal agent for Medicaid and has denied any wrongdoing or legal responsibility. The company is also responsible for navigating the state’s current financial reporting dilemma related to Medicaid payments.
The lawsuit is aimed at the state’s fiscal agent, instead of the state of Rhode Island and the state agency known as the Department of Behavioral Healthcare, Developmental Disabilities and Hospitals (BHDDH) that runs the state hospital, because of legal barriers to filing this kind of whistleblower case against a state, including sovereign immunity.
Kerri White, a spokeswoman for the umbrella agency known as the Executive Office of Health and Human Services that oversees BHDDH, said: “The State is not a party in the Gainwell case and has no comment.”
Why the case is moving forward
U.S. District Court Judge Leo Sorokin initially dismissed the complaint but recently opened the door to fresh arguments by the whistleblowers who brought the complaint. Sorokin then asked the federal government to weigh in on whether a third party, such as Gainwell, could be held liable “for knowingly causing the submission” of false Medicaid claims.
U.S. Attorney for Massachusetts Leah Foley answered, advising Sorokin that a fiscal agent can be liable for the submission of a false claim to Medicaid if it failed to stop the payment, or “recklessly” or “deliberately ignored” evidence that a claim violated Medicaid rules.
The prosecutor’s filing came just days after President Donald Trump signed an executive order forming a task force, led by Vice President JD Vance and including the Department of Justice, to crack down on state-level fraud in benefit programs, including Medicaid, according to Bloomberg Law, which was the first to report the federal government’s entry into the case.
What is the lawsuit about?
The case, initially filed under seal in June 2022, centers on allegations that Gainwell and unnamed administrators of the hospital, which operates on two campuses in Cranston and Burrillville, “schemed” between 2016 to 2021 to overcharge the Medicaid program in multiple ways.
The suit alleges billings for nursing home-level services at a hospital that was not licensed as a nursing home, and at levels that did not reflect the actual cost of the services. Meanwhile, it said, the hospital manipulated patient counts to minimize the number of mentally ill patients.
Brian Daley, the hospital’s former chief medical officer, Assistant Chief Medical Officer Andrew Stone and former Chief Financial Officer Jennifer White allege that the hospital submitted numerous fraudulent bills to Medicaid, “to the tune of hundreds of millions of federal and state health care dollars,” which Gainwell then approved.
“On average,” the suit says, Eleanor Slater billed Medicaid almost $550,000 per patient, per year, which is almost four times the state average. And the average stay for each patent was more than nine years.
Beyond the financial games, the whistleblowers said that the hospital’s patients suffered.
“In this rules-free zone, patients were grievously harmed. Psychiatric and developmentally disabled patients were [often] warehoused in ESH, a physically deteriorating state hospital … for years or decades.”
Lawsuit: Patients restrained all day, every day and subjected to abuse
The suit specifically references Daley meeting a patient in 2018 who had been there since 1958, having been hospitalized for 60 years.
“There simply is no medical or psychiatric illness that would require anyone to be in a hospital for 60years, especially a licensed acute-care hospital which ESH was supposed to be,” the suit says. “That patient, however, was just the tip of the iceberg.”
The suit details patients locked in rooms, subjected to physical and sexual harm, and held in physical restraints, such as TAT belts, a kind of wrist-to-wrist restraint that acts like the shackles or handcuffs used in prisons. Patients were held in these conditions, with restraint, “all day, every day, for years, including sleeping hours.”
“Some were subjected to physical and sexual abuse by dangerous criminals who were transferred to ESH from prison simply because the state had nowhere else to put them,” the lawsuit says.
Some of the allegations were reported by various news outlets, including The Providence Journal, during then-Gov. Gina Raimondo’s administration.
How did we get here?
Sorokin dismissed the lawsuit in 2025. But he agreed in December to allow the plaintiffs to file a second amended complaint.
In his order, he noted that the whistleblowers had not produced a “communication between the state and Gainwell that would support an inference that Gainwell was in on the state’s scheme against the federal government.”
However, the facts in the new complaint “plausibly allege” that Gainwell acted with “at least, reckless disregard” when it came to the hospital’s fraudulent Medicaid billing practices.
Sorokin said that the facts presented suggest that even a “simple review” of the hospital’s operations would have caused concern for Gainwell, particularly its nursing home designation.
“Taken together, these facts suggest that Gainwell acted beyond mere mistake or negligence,” Sorokin wrote.
Reporting by Katherine Gregg, Providence Journal / The Providence Journal
USA TODAY Network via Reuters Connect
