Sunday, March 31, 2002

NEW YORK - A New York Supreme Court judge granted a temporary restraining order against Mel Lev, the former CEO and "principal member" of the Community Health Accreditation Program (CHAP), and other members of his family.

The order follows allegations, filed in Manhattan, that the Levs have misappropriated more than $120,000 in CHAP funds since he took over at CHAP in February of last year. The most egregious misappropriation, according to court documents, involved the use of $12,200 of CHAP funds to pay for a birthday party for his wife.

The documents also allege that Lev siphoned money from CHAP to pay his $842 monthly car payment on a Mercedes Benz not needed or used for CHAP business; a $2,200 payment to the Republican National Committee; and a 12,200 finder's fee to the husband of a CHAP employee for introducing Lev to the National League of Nursing, from which he obtained a controlling interest in CHAP last year.

The temporary restraining order (TRO) removes Lev from the management of CHAP and prevents him and members of his family from CHAP's management and denies the Levs access to CHAP's offices, assets and records.

At a March 5 hearing, Lev's counsel asked the presiding judge to put the accreditation organization into receivership, a move that's opposed by the state's attorney general's office, which has brought suit against CHAP on behalf of CHAP's beneficiaries and CHAP itself.

While the Levs battle the charges, the CHAP board is taking defensive measures to keep the alleged improprieties from sullying the reputation of an organization that has emerged as JCAHO's chief rival in the home medical equipment industry. In the past year, both Lincare and Pediatric Services of America, as well as a host of smaller HMEs, have abandoned CHAP accreditation for JCAHO.

"We were just accredited a few weeks ago," said Tom Ryan, president of Homecare Concepts in Farmingdale, N.Y., "and were going to do a press release, but we're going to hold off now. I was happy we made the choice, but it looks like something we're going to have to deal with now."

Theresa S. Ayer, a home health consultant who was president and COO of CHAP from 1996 until Jerry Cohen over in 1998, was named president and CEO on March 1.

"I was here 15 minutes after the Levs left, and I live in Virginia," said Ayer.

Ayer has held a teleconference for CHAP's 50 site visitors, and has been in touch with CMS to keep officials appraised of the allegations against Lev and the steps CHAP is taking as a consequence. Diane Feinstein and Harriet Olson continue to work at CHAP as vice president of operations and vice president of accreditation respectively.

According to court documents, the Lev's misappropriations and "unjust enrichment" has jeopardized CHAP's tax-exempt status and its eligibility for 'deeming authority,' which allows CHAP to perform Medicare and Medicaid surveys.

Ayer said the allegations against the Levs were isolated to the Levs and that their troubles should have minimal impact at to CHAP's operations.

"Their [the Levs] involvement has been pretty peripheral," said Ayer. "Everyone knows this is his [Mel Lev] first healthcare job. He has no expertise in accreditation or healthcare in general, nor do his sons."

The Levs lack of expertise in healthcare is raising questions about Lev's appointment as CEO, a $100,000 year position. As 'principal member' of the not-for-profit, Lev appointed his son, Russell Lev, vice president of operations and compliance officer, a $75,000 year job. Another son, Howard, was CHAP's systems administrator and ran his own healthcare consulting company.

Ayer said those appointments were made after Lev disbanded the group's board of directors in February 2001. A new board was not in place until June 2001. HME