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USA v. Peterson, Et Al. Trial, Week 1

September 8, 1998

Jury Selection Facts

Trial Judge Honorable Ewing Werlein, Jr. began the jury selection from a panel of 80 people with a series of questions of the type:

Have you or a member of your family ever had a problem with care received at a mental health facility, eating disorder unit, drug rehab center etc.?

Have you or a member of your family ever had a problem with a psychologist or psychiatrist?

Have you or a member your family ever had a dispute with an insurance company in regards to a claim?

Responses to the questions were tracked by the number assigned to each prospective juror.

The next phase of the jury selection started immediately before lunch. The jury panel was asked to complete a personal questionnaire. The lawyers reviewed the answers and destroyed then at the end of the day.

Most of the afternoon was devoted to individual members of the panel answering questions from the lawyers and the judge in front of the bench. By the end of the day a jury of 16 people were selected. There were 10 female jurors (all white) and 6 male jurors (5 white and 1 African-American) selected.

Procedure and Schedule Facts

The judge prepared the jury for a long trial, estimating about two months. However he stated that if the trial lasted beyond Thanksgiving that a 4-day Thanksgiving holiday would be observed.

Normal trial schedule: Monday - Thursday 8:30 AM - 5:30 PM (no Friday sessions). Other days when the trial will not be in session includes many Mondays ---the judge has schedule conflicts.

The trial starts at 10:00 AM Wednesday, September 9, 1998 when the judge gives final instructions to the jury. This will be followed by opening statements from the attorneys, expected to take most of the remainder of the day.

Day One of the U.S.A. v Peterson et al. trial ended at approximately 6:30 PM.

Wednesday, September 9, 1998.

Houston, Texas.

Day 2 of trial - Opening arguments

Today marked the second day in a criminal trial brought against five members of the clinical and administrative staff at Spring Shadows Glen, a former mental health facility in Houston. The five are accused of abusing their professional authority by intentionally inducing false "memories" of extreme "ritualized" abuse by satantic cults in wpatients and diagnosing them as suffering from "multiple personality disorder" or "dissociative identity disorder, " a highly controversial diagnosis many clinicians now think is almost always an artifact of overly suggestive therapy. The defendants are accused of using aggressive and destructive techniques with the intent to bilk the patients and their insurance companies of hundreds of thousands of dollars for treatment. This is the first case in which criminal charges have been brought against therapists for allegedly inducing false memories in patients, in this case for profit.

In the course of his opening arguments, the prosecutor, Assistant U.S. Attorney Larry Eastepp, played the tape-recorded screams of a troubled teenager. "These tapes had nothing to do with the patients’ health, but about the defendants’ wealth," Eastepp declared to a jury of 6 men and 10 women and to U.S. District Judge Ewing Werlein, Jr.

A 60-count indictment has been brought against the defendants. 59 counts are for mail fraud which is a federal offense. The prosecution intends to demonstrate that the defendants used the U.S. mails to bill and defraud insurance companies.

In addition, the prosecution intends to show that the defendants administered psychotropic drugs, applied restraints, and used hypnosis and isolation to convince patients of extreme early childhood abuse coerced members of the hospital staff to falsify patient records to justify insurance claims directed the hospital staff to pay insurance premiums to keep the patients’ rich or unlimited insurance policies in effect in order to make claims against these policies for treatment.

Eastepp informed jurors that one policy-holder, L.T. Abney, deliberately dropped his health insurance coverage on his wife and daughters who were patients at Spring Shadows Glen. He hoped that when the coverage lapsed his family would be released from the facility. According to Eastepp, subsequent testimony will show that the Hospital took up the payment of the Abney family premiums in order to hold Abney’s wife and daughters in the facility for several more months.

Defense attorney Larry Finder acknowledged that such payments had been made for some twenty patients, but argued that such premium payments were acceptable practice. According to Finder, one of the defendants, hospital administrator Jerry Mueck, made the decision to make the payments after consulting with his staff and learning that other hospitals made similar payments on behalf of their patients.

Another defense attorney, Rusty Hardin, argued that several of the patients in question were diagnosed as suffered from multiple personality disorder before they were referred to Spring Shadows Glen.

More than a dozen patients have filed civil suits for malpractice against Spring Shadows Glen. One civil suit for the treatment of Lynn Carl resulted in a $5.8 million dollar settlement against the defendants and Spring Shadows Glen. Carl’s case will figure heavily in the present criminal trial. A former nurse manager of the Hospital, Sally MacDonald, testified in the Carl case that she criticized the treatment of Kritsi Carl and others, was demoted, and subsequently left Spring Shadows Glen. She testified further that 12 nurses left the Hospital for similar reasons over an eighteen month period. Judge Werlein presided over the Carl case.

Spring Shadows Glen was closed by the State of Texas in 1992 after state investigators cited the dissociative unit for irregular and extreme clinical practices. Memorial Health Care System took the facility over in 1994 and defendant Jerry Mueck moved to the new facility as its hospital administrator.

Earlier, Judge Werlein announced that he expected this case to last 2-3 months. The court will be in session Monday through Thursday.

Thursday, September 10, 1998.

Houston, Texas.

Day 3 of trial - Insurance matters

Detailed testimony concerning insurance records took up most of the third day in a criminal trial in the Houston courtroom of Judge Ewing Werlein, Jr. Werlein is presiding over the first criminal case to be brought against therapists for implanting false memories of extreme childhood sexual abuse by satanic cults in their patients. A 60-count indictment accuses five staff members of the former Spring Shadows Glen mental health facility in Houston of deliberately using coercive techniques to implant the false memories. The prosecution team, led by Assistant U.S. Attorney Larry Eastepp, hopes to prove this was part of an elaborate scheme to defraud patients’ insurance companies of hundreds of thousands of dollars in insurance claims. All of the cases relevant to the trial involve patients who were covered by rich or unlimited health insurance policies.

At issue Thursday were the insurance claims filed for treatment of Mrs. Lynn Carl and her two children, and Mrs. Lucy Abney and her two children. The Carl family has already won a $5.8M settlement against the defendants in a malpractice suit. Judge Werlein presided over the malpractice suit.

In early testimony a representative of Cigna Insurance testified that claims against the policy held by the Abney family were disallowed after a peer review panel determined that it was not necessary to hold Mrs. Abney in an acute care facility. A Dr. Raymond, who is not a defendant but who was on the staff of Spring Shadows Glen at the time, disputed the insurance company finding, after which the insurance company agreed to continue coverage but only at the rate of 50 percent of cost, not the policy’s usual 80 percent of cost.

Rusty Hardin, an aggressive defense attorney for defendant Dr. Judith Peterson, attempted to discredit the testimony of the Cigna representative by raising these issues: 1) That the members of the peer review panel were not directly known to the Cigna representative; 2) that the rate charged for treatment of a diagnosis of multiple personality disorder was the usual rate for such treatment; and 3) that multiple personality disorder is recognized in The Diagnostic and Statistical Manual IV (aka "DSM-IV"), the bible for psychiatric dignoses that is produced by the American Psychiatric Association.

Despite its appearance in DSM-IV, multiple personality disorder ("MPD", now called "Dissociative Identity Disorder" or "DID") is a very controversial diagnosis. Many highly-credentialled psychiatrists think that MPD/DID is amost always an artifact of suggestive treatment.

The Government (Prosecution) then called Mark Trueblood as a witness. Trueblood, from Plano, Texas, is a representative for Traveler’s Insurance. His testimony concerned charges amounting to $107,791.20 for treatment of the Carl family between September and November of 1992, a period of two months.

The Defense objected to the inclusion of any testimony concerning insurance bills paid by Travelers on the grounds that a utilization company had created the records. Mr. Trueblood’s testimony was therefore, the Defense argued, second-hand. The Prosecution countered with an argument that witnesses for the utilization company would be called in the near future. Judge Werlein sustained the Defense objection, but only with the understanding that the Prosecution would call its witnesses.

The Government next called a representative of Aon Insurance, a subsidiary of Traveler’s, as a witness on the Abney case. The representative testified that the Abney family was covered by Combined Insurance, a subsidiary of Aon, during the period in question and that $123,940.46 was paid out in claims. He also testified that benefit checks for Mrs. Abney’s treatment were sent to an address at Red Oak Drive in Houston. The testimony further brought out the fact that Mr. Abney had become concerned that the treatment his family was receiving was fraudulent, and that he had written a letter to the insurance company asking them to drop coverage on his wife and children in the hopes that with no insurance payments forthcoming, his family would be released from Spring Shadows Glen.

Testimony under examination by Rusty Hardin, defense attorney for defendant Judith Peterson, showed that the insurance company rejected this request on the grounds that the treatment was "not fraudulent" and that it was unusual to drop a policy before the end of the year. Hardin also raised questions about Abney’s motivations. Characterizing Abney’s attempt to drop the policy as "cruel," Hardin’s questioning brought out the facts that Abney was seeking a divorce from his wife at the time, that the two children were Mrs. Abney’s through a former marriage and that Abney changed the beneficiary on his life insurance policy at the same time.

Whatever Abney’s motivations, the prosecution hopes to establish that Spring Shadows Glen eventually assumed the premium payments for the Abney family’s treatment and continued to file claims against the policy for several months. If the Prosecution can establish a consistent pattern of financial gain from the insurance policies of several patients, Mr. Abney’s motivations will be largely irrelevant.

Hardin also asked the witness if he was aware of anything that would prohibit the Hopsital from paying the insurance premiums for the family. The Aon witness testified that "It would be highly unusual but it would not be prohibited if the Hospital submitted a coupon."

Insurance testimony will continue when the trial reopens on Tuesday, September 15.

The False Memory Syndrome Foundation offers bibliographies to provide further information on MPD/DID and satanic ritual abuse.

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