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USA v. Peterson, et al. Trial, Week 7

Monday, October 19, 1998.

Houston, Texas.

Day 19 of trial - McDonald cross-examination

The federal criminal trial against five former employees of the Spring Shadows Glen private mental hospital for insurance fraud enters its 7th week. Defense attorneys cross examined witness Sally McDonald who had been a nurse manager at the hospital and who had testified that the defendants had deliberately exaggerated diagnoses in order to collect insurance payments. Psychologist Judith Peterson, psychiatrists Richard Seward and Gloria Keraga, therapist Sylvia Davis and hospital administrator George Jerry Mueck were charged in a 60-count indictment that they had deliberately used hypnosis, drugs, isolation and techniques associated with ’mind control and brain-washing’ to keep patients in treatment unnecessarily.

Under questioning from Peterson defense attorney Rusty Hardin, Sally McDonald admitted that Peterson appeared to believe in satanic cults and in the type of therapy she conducted. "She was convincing in her beliefs about it. I think during that time she was wrapped up in the power of the whole thing and believed it," Mary said.

The defense has argued that the treatment patients received was appropriate because patients had already received diagnoses of severe mental illness before being admitted to Spring Shadows Glen, now under new ownership known as Memorial Spring Shadows Glen.

McDonald had testified last week that young patients were pressured to display symptoms before insurance reviewers came to the hospital to examine records. McDonald said that if patients were on suicide watch, that would ensure that they would remain in the hospital. McDonald had said that nurses’ comments and therapists’ comments often differed. Hardin introduced charts that rebutted McDonald’s claim. They showed that both nurses and technicians had charted alternate personalities, violent behavior and possible symptoms of suicide.

Chris Flood, defense attorney for Richard Seward challenged McDonald’s testimony about the "safe temper tantrum" planned for insurance purposes. He suggested that the 13-year-old patient, Karen G., had been ordered to have angry outburst as a part of her therapy. Flood said that G. had been diagnosed as being overly compliant and unable to assert her feelings. The outbursts were ordered to help the child express her true feelings.

G. had been admitted to Spring Shadows Glen just before her 13th birthday in order to keep her safe from the cult. Medical evidence showed no signs that she had been raped but during therapy G. came up with memories of rapes between ages 7 and 11. McDonald said "They (therapists) were charting rapes and eating babies, and there was no evidence that that had happened."

Flood suggested that responsible therapists had to admit patients who might be in danger. McDonald replied that a teen-ager should only be admitted if he or she were a danger to him or herself. "A psychiatric hospital is not a protective agency for adolescents," she said.

McDonald also said that if a patient claimed to be Ronald Reagan that therapists would most likely try to bring the patient back to reality. She said, "You wouldn’t attempt to chart if they had a foreign policy."

This summary is based on a Houston Chronicle article by Mark Smith, "Witness says therapist believed in work: Focus was on uncovering cult ties," 10/19/98

Tuesday, October 20, 1998.

Houston, Texas.

Day 20 of trial - From notes by attendees

DISCLAIMER: The following material, based on hand-written notes, is presented for those who may be interested in the writers’ personal impressions of the courtroom proceedings as they happened. Although the writers have attempted to be as accurate as possible, the official transcripts remain the authoritative reference for what actually occurred.

Larry Finder, attorney for Jerry Mueck spends the morning and early afternoon questioning Sally McDonald. At the start of his questioning Finder reviews with McDonald the records of how she came to work at Spring Shadows Glen (SSG). McDonald had received a part of her nursing training at SSG and she had decided that SSG was where she wanted to work. In 1985 she wrote a letter to the Director of Nursing and requested an interview for employment. In the letter she expressed her desire for a position as a children and adolescent psychiatric nurse.

FINDER: One of the things that had impressed you about SSG was that there was good teamwork at the hospital. Is that true?

MCDONALD: Yes. Mueck believed in team approach until 1991.

McDonald had worked at Sharpstown General Hospital about one year before her employment at SSG. She started work at SSG on June 2, 1986 and on March 30, 1988 she was promoted. Mueck noted in her promotion letter that McDonald was "well deserving of promotion." At that time SSG was treating chemical dependency, alcoholism, eating disorders and patients who were a danger to self or others.

Hospital Organization

At this point Finder starts to be more aggressive in his questioning as he asks McDonald about positions and operating procedures at the hospital. There were sharp disagreements between McDonald and Finder on the way things worked at the hospital. At one point Finder gave an analogy of a person walking down the street beside a tall building with clouds overhead. In the analogy the person feels a drop of water and assumes that it is raining but in fact the water is coming from someone washing the windows on the side of the building.

FINDER: Your conclusion that it is raining would be wrong.

McDONALD: After I walked a few more feet I would know that it was not.

Finder then resumed his description of how things worked at the hospital and gave the chains of command for doctors and nurses.

McDONALD: Everyone knew how it worked there.

FINDER: That’s your opinion ma’am. Mueck had an open door policy... Are you familiar with the hospital by-laws?


OLLISON raises an objection about by-laws not being an authoritative source.

JUDGE: Come on Mr. Ollison.

FINDER: Was Mueck in chain of command of physicians?

McDONALD: I don’t know if he was in the chain of command.

FINDER: Mueck could not practice medicine, he could not discharge patients, he could not write prescriptions. [These functions had to be done by an MD.] FINDER: Mueck had a CPA. He did not diagnose patients. FINDER: The hospital had established committees - for licenses. John Doe would have to be credentialed. There was a Quality Assurance Committee and there was a Medical Records Review Committee (MRRC). Things that you were not aware of. Did you know about the executive committee?


FINDER: If they were not part of your job you did not know about them. Correct?


FINDER: Physicians admitted and discharged patients and physicians make medical diagnoses. In a hospital is it not rare that there are disagreements?

McDONALD: For the most part they come together.

FINDER: Tension between doctors was not unique to SSG.

McDONALD: The kind of tension between doctors at SSG was unique.

FINDER: SSG hired people whose job title was patient’s advocate. Did you know that?

McDONALD: I was not aware of that.

FINDER: Micky Watson had the title of Patient’s Advocate.

McDONALD: I thought she was a therapist.

FINDER: Dr. Devita worked in the late 1980’s to get the whole family involved in patient treatment. Was Dr. Devita a good doctor?


FINDER: Dr. Devita became medical director of the whole hospital.

McDONALD: He should have seen what was going on and stopped it. Where he failed was not seeing what was going on with the children.

FINDER: Vernon Wallen. How long did you work with Dr. Wallen?

McDONALD: 1988-1992

FINDER: Was he a good doctor?

McDONALD: Changed when the adolescents were compromised

FINDER: What about Fink?

McDONALD: He compromised patient care when he refused to go to Mueck about concerns.

FINDER: The doctors were good until they didn’t embrace your beliefs.

McDONALD: They failed to live up to their oaths.


The remainder of Finder’s questioning of McDonald dealt with meetings that for the most part included McDonald and Mueck.

In 1991 there was a meeting to discuss the discuss the performance of Dr. Rene Forest. Those attending felt that Dr. Forest was doing a poor job as director of nursing. She was having great difficulties with MPD. Those attending the meeting took the position that Dr. Forest had to go for the good of the hospital. Mueck asked Dr. Forest to resign as a result of that meeting.

FINDER: Managers have to make hard decisions. Do you agree?


FINDER: Dr. Forest was asked to resign based on meeting with a group of nurses. You attended and the nurses listened to you. Mary Ann Baken took over as director of nursing.

A discussion of Dissociative Disorder program covered all of 1991. McDonald indicated that the first time she expressed concern about the program was when the 13-year-old patient Karen G. was transferred to the adult unit. Finder wanted to know if McDonald had ever mentioned fraud in her journal or any other personal records that she kept while at SSG. She said that she probably didn’t.

Large meeting in hospital dining room to discuss MPD- July 27, 1992. Minutes from the meeting notes: - 100% of children MPD if their mother is MPD - hypnosis is not used [? - probably to retrieve memories] - SSG is tops in the field - special nursing skills required.

August 4, 1992 meeting - meeting notes were from McDonald. Concerns expressed included - nurses were not considered a part of team -issues related to charting - ethical concerns - type of treatment disruptive to other patients - must stay within the community standards for nursing practice.

August 13, 1992 meeting - Discussed concerns about a proposed therapy session where a child was to be put in 9 point restraints - It was decided that it would be up to the doctor to get permission from the mother for the restraints. Therapy session was canceled.

Dec 1992 - meeting where sharp disagreement was expressed regarding treatment methods. - clinical experience not appreciated [Peterson] -no mutual respect - it was decided that the meetings would continue on a regular basis.

FINDER: There was a debate.

Sept 4, 1992 - Jerry Mueck called meeting to discuss restraints. Finder stated that Jerry Mueck was promoting teamwork.

Sept 15, 1992 meeting - Dr. Peterson was angry that her therapy sessions were being questioned.

Sept 21, 1992 - MPD meeting Mueck opened the meeting with "much has happened - the purpose of the meeting is to find a middle ground." There were doctors and nurses that were involved in the debate. One of the doctors asked "How can we prove to each other we are doing what we need to do to provide good medical care?

McDONALD stated that there were endless meetings. She said that she saw them as delaying tactics.

There was a Dissociative Disorders (DD) subcommittee - In a meeting on October 2, 1992 a working group was formed to work out a means for a more effective delivery of medical care. Mueck provided a document to be used by the subcommittee.

FINDER: In the concerns of the nursing staff there was nothing about forcing kids to have memories.

Finder presented a document that included concerns of the clinical staff. Their concerns expressed the need for more in service training - MPD patients should be treated by nurses whether they believed in MPD or not.

Finder indicated that there were 6 MPD meetings over a period of one month and two days. Mueck, Seward and Carol Smith were at all the meetings. Judith Peterson missed one.

In October the hospital sent a large number of people to an MPD meeting held in Washington DC. Finder called attention to the fact that this was a great expense for the hospital.

Meetings to discuss restraints continued in October. The outcome from the meetings was that the hospital was developing guidelines on the use of restraints.

FINDER: Do you know Dr. Chu? [expert’s name brought up in relation to treating MPD patients]


FINDER: He is an expert on DD.

Meeting on 2/28/93 - for DD task force - discussed improper use of hospital records - guidelines should apply to everyone - inappropriate to use as a battleground.

McDONALD: Document was after I left.

2:20pm Dan Cogdell - attorney for Keraga - questions McDonald

Cogdell starts by reviewing what a nurse could or could not do.

In earlier testimony the admission records for BJ Carl were questioned. The admission of BJ was on 6/8/92 but Dr. Keraga’s notes were not transcribed until 2/2/93. There was an implication that the transcribed notes were not correct. Cogdell produced hand written notes from Dr. Keraga dated 6/8/92 that matched the 2/2/93 record. The notes indicated that BJ had been a victim of catastrophic programming and that he had stolen his father’s van and had placed other people in danger.

In earlier testimony McDonald indicated that Dr. Keraga rarely attended staffing sessions. Cogdell first produced documents of staffing sessions where Dr. Keraga attended but these sessions were after McDonald had left. Finally Cogdell was able to produce some evidence that indicated Keraga did attend some of the staffing sessions while McDonald was still on the unit.

Cogdell then took issue with McDonald’s earlier statement that Dr. Keraga had taught children to do self hypnosis.

After the afternoon break David Gerger, attorney for Sylvia Davis, takes over

David Gerger uses his time questioning Sally McDonald to bolster the claim of the defense that the Abney family and Carl families were extremely ill when they arrived at SSG. He called attention to the history of abuse that had been reported to CPS as far back as 1984. He then proceeded to produce extensive hospital notes and journals that described cult alters, abuse by other family members, self harm etc. Examples:

From note from nurse Hays: During therapy session alter exhibited behavior of wanting to hurt self and others.

Kristi Carl had made a statement that Hitler was out to kill them after therapy session.

From an April 93 note: Kristi Carl worries that brother and father may not be willing to change. Worried that she would she would be returned to setting where she was abused by brother.

Gerger describes forms of sexual assault as defined by Texas state law. He makes the point that a child can be sexually abused in other ways than by vaginal sexual intercourse. The other forms of sexual abuse would not necessarily be detectable by a normal physical exam.

McDONALD: I look for behavior.

Gerger then produces additional notes from the hospital records to support an abuse history.

Patient: I don’t want to express my anger because when I was home my parents would kick me and send me to my room.

MD note: Karen states that she hears the voices of alters.

June 1992 Note: Karen has a child like alter and it has no name.

July 1992 Note: Karen dissociated to an alter and said why don’t they let me stay or the bad people will come and take me away.

CPS Record for Karen

Jan 1984: Child has bruises on upper back part of leg and bruises on face.

One month later there is another allegation to be investigated. Swollen left cheek - cut on mouth.

CPS: - need for services in this case. Karen is a victim of abuse by father and family therapy is needed.

As Gerger continued to bring in other parts of the CPS record he kept looking at the clock. Time was running out for the day and it was now after 5PM.

Geiger brought out additional CPS records that were from a time period after McDonald had left SSG.

Gerger read from a Jan 1993 the records indicated that there were substance abuse problems by mother and her children.

Government Attorney Ollison requested that the entire paragraph be read. Gerger then read how Karen had been involved in cult activity since she was 2 years old - she had disclosed sexual abuse by stepfather - she had been burned and hit with a mallet.

At 5:15 Gerger finished his questions.

There was no redirect from the prosecution.

Wednesday, October 21, 1998.

Houston, Texas.

Day 21 of trial - From notes by attendees

DISCLAIMER: The following material, based on hand-written notes, is presented for those who may be interested in the writers’ personal impressions of the courtroom proceedings as they happened. Although the writers have attempted to be as accurate as possible, the official transcripts remain the authoritative reference for what actually occurred.

Lawyers moved to the bench at 8:15 for instruction from Judge Werlein. The court stenographer was taking notes. Hardin was speaking for the defense and Eastepp for the government. The jury had been seated, and those of us away from the bench could not hear the conversation.

This morning’s session began at 8:35 with Ms. Shanahan in the witness chair. She represented a Massachusetts company that monitors health providers for insurance companies. One of its clients was Motorola Co., which carried Joe Shanley’s insurance. Ms Shanahan has worked for this company since 1990. The company has over 1000 employees. Ollison put 4 or 5 different forms on the overhead projector, and Ms. Shanahan identified the forms. There was an admissions form a medical form, a behavioral form for mental illness, a progress form. A long record was read about conversations between Dr.Seward and various members of the company.

Peterson’s defense attorney Rusty Hardin takes over the questioning. He asks Shanahan how long it takes for a doctor to take over the case and when the taped conversation with Dr. Stalzer took place. At some time in this case there was a tertiary carrier. Shanahan gave a date 10/28/92 when Motorola became the primary insurer. In January 1993 a Dr. Stalzer called Peterson to review Mary Shanley’s case. Two weeks later, Stalzer’s supervisor, Dr. Cserr, called. Hardin asks Shanahan to explain the calls. Shanahan said that the treatment was not acceptable and that the insurance company could not recommend that the level of care or the treatment continue. Defendant psychiatrist Richard Seward complained that the doctors in the insurance company were not qualified to make this decision. "There is nothing unusual in this case" Cserr said. Cserr recommended that the patient should be in a different setting.

Sharon Brajar, a new witness from Lincoln, Nebraska, took the stand. She worked for the same type of company that Shanahan did, health care management. Ollison projected four different forms that the company used. Sharon read each form and explained it. The patient whose records were shown was Lynn Carl. Brajar read 8 pages of notes. Patient has over 1000 altars. She has been in the cult since she was 3 years old. She may have killed children. "This treatment is below any standard care." Dr. McKirk signed this report. Dr. McKirk had spoken with Dr. Peterson. He wrote that the therapist had much experience with MPD. He went on to point out that the patient had not gotten better in seven months, there was some unethical treatment. He noted -- Shorten the hospital stay and the patient’s agony. He had talked to Dr. Raymond.

Hardin cross-examines Brajar.

HARDIN: Do you have any records of anybody but Lynn Carl?

BRAJAR flips back in her book of records to 5/22/91. " I think this is Shanley."

In February 1991 Dr. Sachs reported to the insurance company that the whole Shanley family needed long care treatment. Lots of sexual abuse being reported. Sachs reported that the patient was fragile. "Patient needs 3 days a week sessions rather then one. Patient continues using Inderal." The insurance company authorized 3 days a week. Shanley went to Houston.

HARDIN: Did Sachs tell you why she recommended the patient go to Houston?


Hardin moves on to Lynn Carl. The record showed that in 1991 Lynn Carl was diagnosed with MPD and was highly suicidal. She went to a new facility in Houston. A Dr. Custer informed the insurance company.

HARDIN: Is it true that Spring Shadows Glen (SSG) did not contact Custer.


This same record summary showed that after Lynn Carl had been at SSG for six weeks someone from the insurance company came to Houston to check on the patient. The doctor went to a staff meeting at SSG. The doctor reports Lynn Carl is self mutilating and suicidal.

Another witness takes the stand. Dr. Stalzer is a psychiatrist from Orange County, California. Government attorney Eastepp questions her about her education, etc. She got her M.D. from Cornell Univ. in 1984. Spent the next four years in a psychiatric residency at Univ. of Calif., Irvine. She was Board Certified in 1991. She is a utilization review psychiatrist for PHSA in the western district, which included Texas. She met Eastepp last Sunday. Eastepp asks her how the tape was made. Dr.Stalzer said that all of her phone calls are taped. It is a company rule. She has to remember when a call comes in to tell the caller that they are being recorded. This tape was made in 1993 so there was an intermittent beep. The defense team objected because the tape had already been played. The objection was overruled.

The records showed that a nurse case-manager had contacted Dr.Stalzer to examine the hospital records of Mary Shanley. The case had to be certified, i.e. that the treatment was appropriate in this setting. Stalzer testified it was one of her most unusual cases. It was so beyond the ordinary length of stay. She said that patients who are severely ill might require hospitalization for up to four weeks. She said that she had never seen anything like this. She had reviewed cases of MPD. but had never diagnosed MPD. She had probably seen more than 20, but fewer than 50 cases.

(The usual courtroom procedure was used. The jury had earphones and transcripts to follow. This tape was a little easier to follow.)

The tape was of a conference call made to Dr.Stalzer by Peterson, Seward, and some others. Dr.Stalzer has a clear loud voice.

Eastepp questions Stalzer about the tape. She said that usually acute care doesn’t last that long, patients go into residential care. Stalzer testified that people who get away from their baseline usually do not take that long to recover. When Eastepp asked her why the restraints stand out, Stalzer replied that she had never heard about 11-point restraints. It was very unusual. She had heard of 5-point restraints but never that long. She said that she was also stunned about the 1000 altars.

Eastepp asked Dr.Stalzer why she didn’t want to hear about the theory? She answered that they (Peterson and Seward) wanted to get into theory. She was more interested with facts and behavior. Stalzer said that she couldn’t understand the use of voluntary restraints. She had never heard of them being used for therapeutic reasons.

EASTEPP: At the end you reiterate something about a consultant. What did that mean?

STALZER replied that when the patient wasn’t getting well Peterson should have brought in a consultant. Peterson had told Stalzer that she and Roberta Sachs were experts in the field. Peterson had said that she didn’t know of any others. Stalzer testified that she thought this might be a problem.

EASTEPP asked why Stalzer had asked if hypnosis was used at SSG?

STALZER replied that everyone who was treating MPD used hypnosis. This was a problem. "I was also concerned about their insistence that I certify them. Motorola was a new client with our company. I wanted to be sure about my decision." Stalzer did not certify SSG. Instead she wrote "The patient had been in acute facilities too long. There was no discharge plan, no discharge date. If they were trying to help her get better they would have one (discharge plan)."

Spring Shadows Glen could appeal Stalzer’s decision, and they did. Dr. Seward felt that Stalzer didn’t understand MPD and asked for Dr. Robert Cserr, the head psychiatrist from this company. Seward and Peterson were emphatic that they be certified. Dr. Cserr refused the appeal, and they were not certified to continue Shanley’s treatment.

The trial ended for the day.

Thursday, October 22, 1998.

Houston, Texas.

Day 22 of trial - Claims Reviewer’s Testimony

Psychiatrist Susan Stalzer, a claims reviewer for Private Healthcare Systems, was on the witness stand this week. She testified that whether hypnosis was used would influence her decision on whether to certify whether Mary Shanley needed to remain at Spring Shadows Glen.

The prosecution introduced medical records and taped therapy sessions to show that hypnosis was used often in therapy sessions at the private mental hospital now known as Memorial Spring Shadows Glen. Mary Shanley had testified that hypnosis was a regular part of her therapy in the 25 months she was at the hospital. The prosecution had also introduced a taped phone conversation between hospital psychologist Judith Peterson and Susan Stalzer in which Peterson said that she did not use hypnosis to help patients retrieve memories during therapy at the hospital.

Rusty Hardin, Peterson’s defense attorney, suggested that the taped conversation between Peterson and Stalzer confirmed Peterson’s statement that hypnosis was used only to "process" memories retrieved in nonhypnotic treatment. Although in the beginning of the phone discussion Peterson said to Stalzer that she did not use hypnosis, later in the same conversation she said she used hypnosis to "process and heal" and that hypnosis could help blend and integrate multiple personalities.

According to reporter Mark Smith, "The distinction may be important because research reported as early as the mid-1980s suggested that memories recovered under hypnosis were less reliable than other ones, especially if therapy was highly suggestive."

Stalzer testified at the time of the insurance review she was concerned that Shanley had been at Spring Shadows Glen for more than a year and did not seem to be improving. She testified that most suicidal patients can be stabilized in 30 to 60 days and treated as outpatients.

In the telephone conversation psychiatrist Richard Seward also participated. He told Stalzer that Shanley had "considerably improved" as therapists uncovered more alters. He estimated that Shanley had up to 10,000 alters because of the "extreme level of abuse that she suffered." Seward said, "We’re not intending to treat her by getting deep into her system. That’s just simply where she takes us."

Stalzer testified that she was stunned by the claim of 10,000 alters. "I had never heard of that many alters before, not even close." Stalzer said that Peterson and Seward could not estimate how long Shanley would need treatment and that they had no discharge plan. Stalzer referred the case to Dr. Robert Cserr who was the chief psychiatrist for Private Healthcare Systems. Dr. Cserr recommended against further treatment in the hospital since Shanley was not improving. Shanley was discharged several months later.

The federal government has charged psychologist Judith Peterson, psychiatrists Richard Seward and Gloria Keraga, therapist Sylvia Davis and hospital administrator George Jerry Mueck with 60-counts of mail fraud, insurance fraud and knowingly misdiagnosing MPD in order to keep patients in the hospital. The trial began on September 9. This was the 7th week of trial.

This summary was based on an article by Mark Smith in the Houston Chronicle, "Hypnosis becomes pivotal issue in fraud trial" 10/22/98

Thursday, October 22, 1998.

Houston, Texas.

Day 22 of trial - From notes by attendees

DISCLAIMER: The following material, based on hand-written notes, is presented for those who may be interested in the writers’ personal impressions of the courtroom proceedings as they happened. Although the writers have attempted to be as accurate as possible, the official transcripts remain the authoritative reference for what actually occurred.

The court session starts with the jury out of the courtroom. A decision was made to remove one of the jurors. Previously undisclosed information became available that indicated that the background of the juror might make it impossible for her to be objective about the case. Both prosecution and defense agreed that she should be dismissed.

The jury is brought in and Psychiatrist, Susan Stalzer was on the stand. Stalzer is a claims reviewer for Private Healthcare Systems. As part of her job at Private Healthcare Systems she had reviewed the insurance claims for Mary Shanley from Spring Shadows Glen (SSG) to determine if payment for her treatment should continue. Rusty Hardin starts the defense cross-examination.

In answer to questions from Hardin, Stalzer states that she is a mother of two children. Her first child was born in 1988. Throughout her second year of private practice she saw about 100 adult patients in her office. In August 1990 she started reviewing files - reviewing claim information. Her employer had up to four people reviewing claim information in California and the company had others doing the same job in Mass. She continued to work for the company for eight years and was paid on an hourly basis. At the time she was laid off she was being paid $100 per hour. By 1993 she had 4.5 years as a psychiatrist and one third of her income came from the insurance utilization company. Her total income was about $1000 per week.

The recorded conversation between staff at SSG and Susan Stalzer took place on February 17, 1993. Stalzer indicated that she had probably received the admission summary about one week before. She indicated that she got medical records in only about 5% of cases. She states that she must have gotten the chart for Shanley. She indicated that the biggest issue was how long Shanley had been at SSG. She noted that Shanley came to the hospital as an outpatient to be reprogrammed. Shanley was not from Houston and she came to the hospital on her own. Stalzer did not know anything about Shanley’s hospitalization in Chicago.

HARDIN: How long do you spend on a case?

STALZER: Usually about 15 minutes. This one took a lot longer probably 2 - 3 hours.

STALZER said her concern was whether the treatment going to make Shanley better?

HARDIN: What evidence have you looked at from the government?

STALZER: I looked at documents - Peterson training tape - courses and training requirements Peterson had.

HARDIN: What will be your bill to the government?

STALZER: I will probably bill $200 per hour. I hope they pay it.

STALZER: Views regarding MPD predominated a certain group.

HARDIN: What experience did you have with MPD between 1991 and 1993?

STALZER said that she had seen MPD patients on ward where I was training and she had taken an AMA course on hypnosis. Stalzer indicated that by 1993 she had attended the course on hypnosis that was conducted by people from NY, she had read a paper or two on MPD and she had seen approximately 10 people on a ward that had been diagnosed with MPD.

HARDIN: What is your opinion of MPD as a diagnosis?

STALZER: I have not decided if it’s a valid diagnosis.

HARDIN: How many doctors admitted MPD on the ward where you trained?

STALZER: The patients were admitted by one particular resident.

HARDIN: In 1993 was MPD a recognized diagnosis?

STALZER: It was a recognized diagnosis.

From the testimony patients were allowed to stay in a hospital if it was medically necessary. If not medically necessary a patient could stay at own expense. Case managers would determine what level of medical care to look at. Stalzer indicated that her mind was 80% made up to decertify SSG before she made the telephone call.

HARDIN: At what point [in the telephone conversation] did you stop listening to them?

STALZER: Peterson’s comments were not relevant. I did not believe that dealing with alters was appropriate for hospital care. They were telling me stuff that would lead to decertification. Toward the last 5 minutes I had pretty well made up my mind.

HARDIN: What was your view of cult abuse?

STALZER: I did not see any convincing evidence. I had doubts but it would be possible.

HARDIN asked Stalzer what she would do if a patient came in with tales of cult cult abuse. I would see what effect it had on the patient’s life and I would try to make them function.

HARDIN: and if a patient came in and stated he was God.

STALZER: I would try to lead them to conclusion that they are not God.

on getting another opinion

In the telephone conversation Stalzer indicated that she would be interested in another opinion. Peterson responded that she consulted on a weekly basis with Bobby Sachs. Stalzer did not feel that this was independent. If it was done on a weekly basis then it must be some sort of affiliation. Hardin asked if the October visit by Dr. Rosenstadt would qualify.

STALZER: She [Peterson] had a chance to tell me. A consultant would have to be independent.

HARDIN: Was the controversy about MPD or cults or both?

STALZER: Both. The controversy about MPD in 92-93 was that it was being diagnosed more often than it occurred.

[Hardin question ???]

STALZER: I did not feel that she [Mary Shanley] was going to get better in this facility. I wanted another independent consultant to look. Stalzer: I thought they believed in what they were saying. Stalzer: In the last 5 minutes [of the phone call] I had made up my mind.

Treatment and Hypnosis

STALZER: She indicated that it [hypnosis] was a minor part of her treatment.

STALZER: Specifically provoking this [?] in therapy. I had never heard of this before. I thought it was inappropriate.

HARDIN then discusses the need for restraints in abreaction sessions at SSG.

STALZER: You don’t go there. [referring to actions that provoke patients].

HARDIN: Have you discussed the use of restraints for MPD patients with others?

STALZER: I have not specifically discussed this with other people who treated MPD about the use of restraints.

Abreaction was defined as an emotional response to a memory.

STALZER: I have never thought of this [abreaction] as a therapeutic treatment.

STALZER indicated that she did not feel that hypnosis was absolutely necessary and encouraged regression made people worse.

STALZER: People who were not treating in the area were skeptical.

STALZER: I do not use hypnosis - there is no reason to. I do not use memory retrieval through hypnosis at all.

STALZER referred the case to Dr. Cserr, the chief psychiatrist for Private Healthcare Systems, for his review. Dr. Cserr upheld the de-certification.

STALZER: He thought she [Mary Shanley] is getting is worse and she should be put in a warehouse facility.

STALZER: I wanted an outside consultant. I was not willing to say that she would never get better.

STALZER: I wanted to make sure that we did everything right in this case. I thought other MPD providers would agree with me.

End of Harden cross

David Gerger, attorney for Sylvia Davis, only wanted to know if Stalzer knew Dr. Rosenstadt. Stalzer said that she did not.

redirect from Eastepp

Stalzer agreed with Eastepp’s statement that they [the defendants] thought they were the experts. Eastepp stated that there was always paperwork placing patient’s in restraints prior to hypnotic therapy session with Dr. Peterson.

At this point Eastepp starts discussing hypnosis and the training tape of Dr. Peterson that had been reviewed by Stalzer. Hardin objects on the grounds that this a discussion about a training tape that is not in evidence. Eastepp then asks for the tape to be played. Hardin objects. The Judge overrules and tells Hardin that he opened the door.

The Cavalcade Productions 1992 Training featuring Judith Peterson and Roberta Sachs. In the tape a person takes on the role of a patient as Peterson demonstrates her technique of processing memories under hypnosis.

After the tape Eastepp asks Stalzer if taking down in a trance was the same as hypnosis. Stalzer indicated that it was hypnosis.

EASTEPP: Were memories really retrieved.

STALZER: appeared to be.

Hardin returns to clarify what was on the tape

Hardin first states that lay people would watch the tape and it would look silly. Hardin then went through a series of questions to which Stalzer agreed that what Peterson was doing on the tape was processing memories under hypnosis that had been retrieved outside the therapy session. Hypnosis was not used on the tape to retrieve the memories under hypnosis.

Witness Susan Stalzer excused at 2:40pm

Witness Dr. Laura Miller

Dr. Miller came from Chicago where she is assoc. professor of Psychiatry at the University of Chicago. She received her BS at Duke - she received her MD at Harvard in 1982 - she did her medical internship in Chicago. She has been Board Certified in Psychiatry since 1988. She does hands-on training with patients and also classroom training on topics related to mental health. She has her own clinical practice. Her specialty is treating pregnant women who have mental illness.

Miller has lectured about MPD and has seen 6 or 7 patients between 1980 and the present. She co-authored two papers on MPD while at Harvard Medical School. Miller came to know Mary Shanley in 1993 after receiving a call from Shanley’s attorney, Mark Epstein. [Epstein was Shanley’s first attorney and he helped her with her divorce.]

EASTEPP: What procedures do you follow when get a new patient like Mrs. Shanley.?

Miller describes a patient evaluation that includes, interview, a status exam, obtain prior records when appropriate, physical exam when appropriate, lab tests when appropriate.

Dr. Miller indicated she completed the intake form to record all the preliminary information.

Dr. Miller first saw Shanley on 8/18/93 for 2 hours in the women’s clinic where Dr. Miller worked. She gave an Axis 1 diagnosis of Panic disorder after the interview.

Dr. Miller described that a treatment plan would indicate what type of therapy to be administered and part of the therapy would include the medications to be prescribed and would take into account the medications that she was already on.

Another section of the intake form reviewed the historical - social context of the patient as it impacted their life now. This section answered questions about their support system and other issues impacting the patients life. This section was used by Dr. Miller to record that Shanley was on disability from her work. Information came from patient.

The current symptoms recorded - patient did not record or report any symptoms at this time. Dr. Miller stated that she observed no symptoms.

Mental Status - This section of the form was used to look at expressions of anger, anxiety or distractibility.

Suicidality - In this section patient is asked if she has ever attempted suicide or is considering suicide. Shanley answered no to both questions.

Emergency Intervention - Section for patients that are in acute crisis.

Patient/Family (personal history) - no history of alcoholism, no substance abuse, no physical abuse, no sexual abuse (does not cover rape) -Patients family had history of alcoholism

Depression - Yes

At the end of the intake Dr. Miller gave presumptive DSM-III diagnosis of possible panic disorder

afternoon break

After the break in response to question from Eastepp Dr. Miller indicated that she had met Dr. Braun at a group meeting many years ago. She had never treated a patient of Dr. Braun or Dr. Sachs.

Dr. Miller went on to describe the things that were looked for to assess the patients Mental Status. These included grooming (how well the patient took care of self), eye contact, speech patterns, motor activity, tremors, affect (outward expression -able to express all kinds of emotions), congruent (does the emotion match what is being expressed), mood, thought process, thought content (hallucinations, homicidal or suicidal)

Problem List - Things that were current problems for the patient. Dr. Miller said for example a person could be homeless. In Shanley’s case she was concerned about loss of custody of son, she suffered panic attacks and she was depressed. PTSD was also possible.

Disposition - What was going to happen next. For Mary Shanley: ---extended diagnosis evaluation ---review prior records ---talk to her more ---Require medications and therapy ---Will include child evaluation - son would be seen by another psychiatrist [at that time Dr. Miller did not realize that this would be impossible. She was not aware of the legal complications.]

Next entry in record - Sept 3

Dr. Miller had reviewed records available. Records included hospitalization at Rush, SSG and records from another Dr. Miller who saw Mary Shanley in Houston after she was discharged from SSG. The quantity of records filled a legal size box. The records included information from nursing, physicians, etc. Dr. Miller was aware that Shanley had recently gotten out of hospital and it was usual to obtain previous medical records when treating patient.

Session on Sept 3rd lasted 2 hours - Session was long because it was detailed and unusual. Shanley had no acute needs.

Current assessment - regaining weight - 4 lbs under normal weight. Patient was able to go where she wanted except she had problem going to churches - this was unusual. People usually have problems with snakes, spiders, lightning etc..Dr. Miller noted that patient looked better. Patient clarified several issues raised by medical records -- emotionally abused but not sexually abused by mother - self destruction - burning was result of paint thinner. According to Dr. Miller if a patient has self destructive behavior it could be caused by depression, obsessive-compulsive disorder, repeating traumatic things that have not been worked through.

-pseudo seizures - Dr. Miller stated that pseudo seizures are fairly common. She then went on to describe different types of seizures including epilepsy.

-multiple pregnancies - from the records patient had been pregnant 4 times. She then talked about Shanley’s story of a pregnancy at age 13. Dr. Miller indicated it understandable how belief could arise when there were no information to the contrary.

-why cult involvement arose in the first place. Shanley reviewed the story about the girl coming to the door carrying a large bag and looking for a slumber party and the story of anonymous phone calls from people saying that they were watching Ryan.

-suicide attempts - patient was currently suicidal. Dr. Miller noted in her records that Shanley told her that she was the most evil person alive.

Dr. Miller said she did not accept prior data without current data to back it up.

Dr. Miller: We are trained to find data to back up diagnosis. We look for what a previous diagnosis was based on.

Dr. Miller’s treatment included weekly psychotherapy to help Shanley recover from the trauma of the previous hospital stay. She was being treated for PTSD from her long hospital stay - she no longer suffered from trauma of the date rape. Shanley was resuming a normal life and there was no need for her to be in hospital. Dr. Miller thought it was still too early to get off disability.

Symptoms were primarily depression.

Dr. Miller wrote two papers on the relation of MPD and Epilepsy.

Next visit September 8 - as scheduled

45 minute session

addresses goals and supportive psychotherapy

Noted that Propanolol was being given in larger than normal doses.

Next visit - one week later - September 17

Patient could tell me what was on her mind

Foremost concern was for her son.

Dr. Miller did not hypnotize Shanley. Dr. Miller felt that hypnosis was useful for pain management and stopping smoking. Next visit - one week later -

Patient is taking steps to form friends and integrate into community
No active symptoms
Still checking to look for things that were diagnosed in the past

Court adjourned at 5:00 pm

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