Holistic Touch

Before he met JoAnne Mandel, Steven Berk seemed headed toward a bad end.
Berk had a fierce appetite for alcohol and drugs, suffered from depression and an eating disorder, and had almost lost the will to look after himself. Desperate to get a grip on his life, Berk entered an intensive therapy program at the River Oaks Health Alliance, a community mental health center founded by Mandel in 1992. Berk's therapy regimen, known as the "Wellness Program," has earned the 56-year-old Mandel much praise in alternative medicine circles. Her reputation spread locally with the help of Getting Well Again, a half-hour television program broadcast by Access Houston. The show featured Mandel -- an intense and attractive woman with a stunning mane of red hair -- discussing mental-health issues from a distinctly New Age perspective.

The program, which still airs occasionally, evolved from Mandel's practice at the River Oaks Health Alliance, known as ROHA. In a tidy, two-story brick building at 1414 West Clay, Mandel's staff of counselors, acupuncturists, hypnotherapists and chiropractors offers so-called "mind-body" healing, along with potent doses of spiritual guidance, for every malady from drug addiction to PMS.

Many practitioners of traditional medicine scoff at such techniques. But Mandel can boast a devoted clientele, some of whom do not hesitate to say she's saved their lives.

But not all of those who have undergone treatment with JoAnne Mandel hold her in such high regard. Some say that Mandel gained their confidence with a gentle empathy while billing Medicare and other insurers for exorbitant sums of money. Among the most disgruntled ex-patients are those who once lived at the H.E.L.P. House, a taxpayer-supported housing project for homeless men with AIDS that is owned and run by Mandel's nonprofit social-service agency, the River Oaks Health Association. Former residents claim Mandel billed their Medicare accounts as much as $14,000 a month for Wellness Program sessions they were required to attend.

Mandel hardly has a better reputation among the therapists, counselors and social workers who have worked for her. They claim she is motivated by money rather than the good mental health of her patients. In 1994, a handful of holistic healers -- usually a hard-to-rile bunch -- accused Mandel of bilking them of thousands of dollars in insurance reimbursements.

Steve Berk knew none of this when he enrolled in the Wellness Program in early 1996. That July, he was arrested for drug possession, and served a four-and-a-half-month sentence. He was released from jail in November, with no place to go. Everyone he knew, it seemed, had washed their hands of him -- except for JoAnne Mandel. She gave Berk an apartment at the H.E.L.P. House, and he resumed his sessions in the Wellness Program, which combines traditional Western mental-health practices with yoga, hypnotherapy and other holistic-healing techniques.

And so it was that Berk gained a new appreciation for sobriety and pulled his life together. In fact, he may have begun to see things a little too clearly, at least for JoAnne Mandel's sake.

After his release from jail, Berk noticed that the Wellness Program had changed. The sessions for H.E.L.P. House residents no longer took place at the West Clay facility, but at a dank, depressing apartment complex near the Astrodome. The complex is owned by a nonprofit organization called the Paraclete Foundation to house roughly 25 people suffering from schizophrenia or other serious mental illnesses. In February, Mandel contracted with the foundation to provide therapy to Paraclete residents, and moved her H.E.L.P. House clients there for treatment as well.

When he first saw the place, Berk was reminded of the dumps where he used to buy crack cocaine. The walls were unpainted and the windows were filthy, at least the ones not cracked or broken. There was only one bathroom, and it was so dirty the female therapists wouldn't use it, preferring to walk around the corner to a convenience store.

Berk objected to having to go there every day, but he had no choice: Mandel required attendance in the Wellness Program as a condition of living at the H.E.L.P. House.

After six weeks of the daily sessions, Berk had progressed enough to begin the transition to something resembling a normal life, or so he thought. Mandel disagreed, insisting he wasn't ready. She had almost convinced him that he was too sick to leave the H.E.L.P. House when Berk began to examine his Medicare statements. He was shocked to discover that Mandel had billed the government-funded insurance program more than $46,000 from the time he was released from jail in mid-November through March. Convinced there had to be some mistake, he asked Mandel for a detailed statement of his treatment. Instead, she sent him a series of invoices totaling $12,444, the portion of his therapy costs that had not been paid by Medicare.

As Steve Berk's therapist, JoAnne Mandel might be the only person who could appreciate the significance of what happened next. One afternoon in early June, Berk told Mandel he no longer trusted her, that he had lost respect for her as a friend and therapist and that he regarded her as an opportunist who had exploited his weaknesses to make money.

"When I started with her, I fit the profile of someone to be taken advantage of," recalls Berk, a tall, thin man with a pageboy haircut and horn-rimmed glasses. "When I got out of jail, I no longer fit that criteria."

Berk also told Mandel that he planned to report his concerns to Medicare. A day later, he received a call from Tiffany Baugher, a therapy intern at ROHA, who had been told by co-worker Ty O'Malley that he overheard Mandel making arrangements to have Berk involuntarily committed to a mental institution in Oklahoma.

Baugher set up a meeting with Berk and O'Malley at Crossroads Market, a bookstore and coffee shop on Westheimer near Montrose. When he arrived, Berk told them how Mandel had tried to talk him into entering a local medical hospital for treatment of his eating disorder, which, according to her diagnosis, had thrown his blood sugar out of whack.

"We told him, 'Don't go back there,' " Baugher says, "and whatever you do, don't let them put you in the hospital.' "

He didn't, and by the end of that week, Berk had been discharged from the Wellness Program and had left the H.E.L.P. House. He says he's feeling better than ever. Baugher and O'Malley were summarily fired last month by Mandel, and have moved on to new jobs. But they haven't completely left their experience with JoAnne Mandel behind.

"You can move beyond the belief that you will always be a victim and be an artistic creator in your own life. TAKE A RISK ... Embrace those things in life you really deserve."

-- JoAnne Mandel, from a brochure for the River Oaks Health Alliance

To JoAnne Mandel, healing is nothing short of a transformation of the self. Even therapy sessions with her patients are laced with testimonials about her own "path of recovery."

ROHA's Web site -- www.InnerWisdom.com -- has a link to a "Message from the Founder and President," in which Mandel refers to an upbringing in an "unhealthy family system" which led to a personal struggle "to overcome extreme and overwhelming fear."

She found salvation in New Age studies, which she claims brought about "the resurrection of my soul from tragic experiences." Today, Mandel describes herself as a spiritual warrior and healer, someone guided by the teachings of prophets and philosophers. That's a characterization that might surprise a number of people whose auras have crossed paths with hers over the years.

Mandel had originally agreed to be interviewed for this story. But she canceled 24 hours before the scheduled appointment and had her attorney, Doug Sigel of Austin, contact the Press.. Last week, Sigel filed a lawsuit on behalf of Mandel, alleging that a handful of former employees and clients have conspired to destroy her business.

Sigel suggested, none too subtly, that the Press could become a party to that same litigation and urged that publication of this story be quashed, at least until "all the facts are in." That said, Sigel declined to identify those "facts" or to even discuss the basis of Mandel's lawsuit. He also turned down the offer to have his client give her version of events.

"I think everyone involved in this is going to be in very serious litigation," Sigel said, "so we need to be very careful about it.

"The fact is, she doesn't know exactly what she's being accused of, she doesn't know who's accusing her of it and she can't comment."

It would seem quite impossible for Sigel to file a lawsuit -- especially one that also alleges defamation of character -- if Mandel doesn't know who's saying what about her. And, of course, that's not really the case. She names as defendants a particular group of former employees and clients, all of whom have become her most outspoken critics: Ty O'Malley, Tiffany Baugher and Steven Berk, as well as former therapist Roxanne Kelly-King.

It's difficult to say whether Mandel really believes them guilty of "tortious interference," as the lawsuit alleges, or simply hopes she can frighten them into silence. Southwest Healthcare Services, O'Malley's current employer, is also named as a defendant in the suit. Mandel is alleging that, through O'Malley, the company has attained "proprietary treatment methods and trade secrets, and confidential information to ROHA's severe detriment." (A Press call for comment last week to Southwest Healthcare Services was not returned.)

Mandel might indeed have some legitimate concerns about the future of her business. Ty O'Malley says records that document Mandel's financial practices are in the hands of the FBI, and her lawsuit accuses O'Malley of stealing confidential files and documents. (The FBI, as is its usual practice, will neither confirm nor deny that it is investigating.) Susan Ray, a former H.E.L.P. House social worker, has filed a lengthy complaint with the Texas Board of Social Workers Examiners, asking that Mandel's license be revoked for violations of the profession's code of ethics.

That complaint apparently was also passed along to the city of Houston's Housing Opportunities for People with AIDS program, which has given Mandel's nonprofit association close to $1 million in federal grants and loans since 1995. J.M. Allen, the HOPWA coordinator, says the city will be monitoring Mandel's use of its most recent grant to Mandel, $750,000 awarded in March to buy the H.E.L.P. House (Mandel has been renting units at the complex since September).

O'Malley and the others are angry about the way Mandel ran her operations. No one, they say, gets into social work without an understanding that the needs of the patients come first. Because of Mandel's strong religious convictions, as well as her open-minded approach to healing, they hired on with her confident that they were destined to do good work.

That, they say, was not the case.
"My goal is simply to take her license," says Ray. "I want her to be non-employable, just like her clients. I want her to feel for one second what it is to be helpless and dependent on another human being."

JoAnne Mandel's professional history and promotional writings suggest that she's an extremely resourceful woman.

The daughter of a linotype operator and a housewife, Mandel was born and raised Mary Jo Romey in a small town in rural northwest Iowa. According to her first husband, Eric Orzeck, Mandel struggled mightily against the mundane circumstances of her life in the Midwest.

"I think her strength is the fact that she is coming from a background where she has made herself the most educated person in her family," says Orzeck. "She was determined to get out of that small-town community and into a bigger city, where she could actually function."

Determined might be an understatement. From 1969 -- a year after she married Orzeck -- until the early 1990s, Mandel's life was an almost obsessive exercise in self-improvement. The first of her three degrees was a bachelor of science in nursing from the University of Iowa in 1972. Though caring for a one-year-old daughter, she immediately began a master's program in Italian Renaissance art history.

Mandel continued those studies at the University of Virginia while working as a nurse in the intensive care unit at the university's teaching hospital. Mandel and Orzeck divorced in 1973, though within a few years they were both living in Houston. Mandel married again, and by the time she divorced a second time in late 1982, the former Mary Jo Romey was lost and confused.

At her InnerWisdom Web site, Mandel describes the early '80s as "the lowest point in my life." Grasping for answers, she submerged herself in holistic and New Age studies while holding down full-time nursing jobs at M.D. Anderson and Texas Woman's Hospital. She took courses in nutrition, vitamin therapy, stress management and Reiki, an Oriental form of therapeutic touch. In 1983, she earned a "master's degree" at Houston's Esoteric Philosophy Center, where she later taught human physiology and herb therapy.

Meanwhile, Mandel began developing the Total Living Concepts Family Center, which would offer a wide range of progressive mental-health treatment to families. In a business plan she prepared, Mandel saw a world gone mad with divorce, incest, domestic violence and the spiritual corruption of children. Noting the "rich market" of the Houston area, where most working families carried some type of health insurance, she proposed to make a combination of traditional psychoanalysis and holistic care available at a single facility.

With its special emphasis on children -- "our culture's greatest natural resource" -- the family center concept seemed to address the very alienation and "overwhelming feeling of insufficiency" Mandel says she experienced as a child. Coincidentally, the program was also designed to produce a new generation of mental-health services consumers.

"The future of the world depends on our children's conceptions of themselves and all their choices depend on their inner view," Mandel wrote in the business plan. "What is happening to our children today? They are being neglected, beaten, abused and shamed. Their inner identity is being destroyed."

In 1982, Mandel earned a degree in psychology from Houston International University -- where she later served as chairman of the board. She received her master's degree in social work from the University of Houston three years later. By then she had legally changed her name to JoAnne Dreyfus Mandel. According to Orzeck, who has maintained a relatively close relationship with Mandel over the years, the change "symbolically freed her of the past."

"I believe it was so she could become that person of her own, without my name or anyone else's attached to it," Orzeck says. "She could have her own life under a name that she felt comfortable with, that was her view of herself and of her own worth."

Mandel opened the River Oaks Health Alliance in 1992, and from the outset, ROHA was a manifestation of the miracle that had transformed Mary Jo Romey into JoAnne Mandel. The clinic embodied an almost shamanic philosophy, with its core belief in the powers of God, the mind and age-old medical principles. But ROHA had a more earthly goal, as well: to bring alternative healing into the modern world of managed health care.

Michael Yeager, a therapist who specializes in grief counseling, was one of the first practitioners to rent office space from Mandel. He says she was not only "ahead of the field" in addiction treatment, but also by challenging mainstream medicine's iron grip on the American health-care system.

"She certainly opened me up to treating addiction in a very different way," Yeager says. "Everything was done on a physiological and spiritual basis that helps the addict move away from their addictive behavior into healthy behavior. I certainly saw some good results. But JoAnne was using concepts, things that were innovative and creative, that managed health care certainly doesn't acknowledge because physicians aren't involved and physicians own managed health care."

Acupuncturist Jimmy Pennington says that alternative medicine has grown into a multibillion-dollar business, but most practitioners "usually don't mess" with insurance companies. Patients have to be referred by a medical doctor, and even then insurers have been particularly slow to accept the holistic treatment of substance abuse and other mental health problems.

"The insurance companies would come out much better if they worked this kind of preventative medicine," Pennington says. "It's gonna change; it's gotta change. It's like physics a long time ago. When Einstein laid down his theory, everybody went, 'Whoa, okay, Newton may have been right, but he wasn't totally right.' "

But in November 1994, several of Mandel's therapists sued her, her former husband, Eric Orzeck, and the River Oaks Health Alliance, alleging conspiracy and fraud. The therapists say they never received thousands of dollars in fees they earned, and they maintain that Mandel and Orzeck, a Houston endocrinologist and the alliance's former medical director, failed to get proper authorization from patients' insurance companies before treatment was performed, as promised. The therapists also accused Orzeck of phony diagnostics and of charging patients "substantial sums" without performing proper examinations.

The most serious allegations were that, in some instances, Mandel and Orzeck told therapists that insurers had denied coverage or had paid lesser amounts, and then pocketed the actual reimbursements when they came in. Mandel and Orzeck denied the accusations. The lawsuit was set for trial in the spring of 1996, but was settled out of court that January. Both parties have agreed not to discuss the allegations or the settlement.

But in a written response to an interrogatory taken during discovery for the suit, Orzeck admitted that he never treated a ROHA patient named Judy Rose, even though her insurance company was billed for repeated visits to his office in November and December 1993.

When contacted by the Press, Rose provided a copy of her statement for that period, which indeed indicated that she saw Orzeck 14 times in November and six times during the first ten days of December.

Orzeck acknowledged in a phone interview that "it would not be my usual approach" to see a patient that often. He also confirmed that there was talk at the time of the lawsuit that Mandel may have used the physician's signature stamp without his permission, though Orzeck said he believed his ex-wife when she denied doing so.

Still, he admitted, if Rose "says she was never a patient of mine, then I guess [her statement] has to be looked at for what it says. It's a statement that is there that I just can't respond to."

Jimmy Pennington, who worked on that initial ROHA program, says he lost about $2,000 in fees. But he declined to join the litigation, choosing instead to accept the loss as his "karma." But Pennington says the feud that developed between Mandel and her employees sullied an exciting opportunity.

"What I thought was good was her idea of working with them and giving them more choices than just regular psychology and drugs," Pennington says. "She tried to work in acupuncture, hypnosis, less invasive-type things to help them emotionally get through it."

"I like Joanne. She had a good idea and her heart was in the right place. But something happened."

For a long time, Ty O'Malley was inclined to give his boss the benefit of the doubt. A former resident of the Transitional Living Center, a housing project for men with AIDS opened by Mandel in 1993, O'Malley was kicked out for a minor violation of program rules. Nevertheless, Mandel hired him "to work around the office and help her promote her business." It proved to be a positive experience: As ROHA's community outreach coordinator, O'Malley helped produce Getting Well Again and later designed Mandel's InnerWisdom Web site.

But, last fall, O'Malley and a few of his co-workers started to question some of Mandel's policies, particularly the requirement that H.E.L.P. House residents must attend the Wellness Program in order to keep their apartments.

"JoAnne always told me that the reason they got the HOPWA grant was because she was providing the services, too," O'Malley says. "But this is a place for homeless men who are HIV-positive. Nowhere in the city's contract does it say they have to attend her program."

But each morning, H.E.L.P. House residents board a van for the trip to the Paraclete Foundation at 9611 Marlive, off of Stella Link. The Wellness Program begins in the clubhouse at 9 a.m. and ends at 3 p.m., except for Friday, when the day ends at 1 p.m. According to a written schedule, there are five sessions a day, everything from relationship building and relapse prevention to yoga and gestalt therapy. Most patients also receive at least one individual consultation a week. They get a half-hour for lunch.

The only excuse is a doctor's note prescribing bed rest. As might be expected of a group of HIV-positive individuals, daily attendance is not always possible.

"Patches," a 41-year-old Houstonian with full-blown AIDS, is so ill he should probably be in a nursing home or hospice. He moved into the H.E.L.P. House in March from the hospital, where he was treated for tuberculosis. For the first week or two of his residency, he took oxygen therapy twice a day. His legs hurt so much that most of the time he had to be accompanied by a home-health nurse, in case he fell. On his worst days, Patches was in a wheelchair.

Yet every morning, he had to produce a doctor's note or appear before Mandel for an assessment of his health. Finally, he appealed to the H.E.L.P. House's on-site manager, who shielded his truancy from Mandel.

"I said, 'Man, you know how sick I am, there's no way I can make it every day,' " he says. "He didn't mind, but they were always telling me that if I didn't go, I'd have to go back on restriction."

Mandel had another hard and fast rule, one that went hand in hand with her mandate that residents attend the Wellness Program. Former H.E.L.P. House social worker Susan Ray says Mandel often denied HOPWA-funded housing to HIV-positive men who did not have Medicare or some other form of comprehensive health coverage, an act of discrimination discouraged by the federal government. Mandel even turned down potential clients with Medicaid, which only covers 30 days of mental-health treatment a year.

Why? In order to get the highest reimbursement rate -- 80 percent -- Mandel had to have more Medicare patients than those who were on Medicaid. Otherwise, the reimbursement rate would drop to around 65 percent.

"I was told to make sure I brought in two Medicare clients for every Medicaid," says Susan Ray. "For HIV-positive people to be on Medicare, they usually have to be really sick. But every time I wanted to admit someone who was on Medicaid or had nothing, I would have to fight with her.

"I had to lie to several very eligible men that we didn't have room. And it was killing me, because we had openings."

Ray and others say that Mandel became increasingly concerned with her bottom line -- to the detriment of her clients, who, having few options, were at her mercy. They say basic needs, such as decent food, security and infection-prevention measures -- all things Mandel was obliged to provide under the HOPWA contract with the city, if not as a conscientious caregiver -- were denied the H.E.L.P. House residents.

Mandel also takes a hard-line approach as a landlord. HOPWA regulations allow one-third of residents' income, usually welfare or Social Security benefits, to be charged as rent -- if, in fact, they have an income. If not, they aren't required to pay anything. But Mandel requires that eligible H.E.L.P. House residents pay the first month's rent, plus a $100 security deposit, before they can move in. And residents with no income -- or those, perhaps, who simply find themselves a little short -- are referred by Mandel's house manager to other social-service agencies for rental assistance.

Steve Berk says that during a brief period when his benefits were suspended, Mandel sent him to Harris County Social Services, where he received a $109 check. He turned $100 of that over to the H.E.L.P. House, only to be given a receipt stating he still owed $47.

"She told the manager to tell me to get it from my mother," Berk claims.
O'Malley says he and others decided to take action after Berk confronted Mandel with his Medicare statements and she repeatedly ducked his requests for a detailed accounting of his treatment. Finally, with the help of another employee, O'Malley managed to get Berk's records for one month, which showed that he had supposedly attended an incredible 89 separate therapy sessions in January.

O'Malley made copies of Berk's treatment plan and Medicare billing records and was about to take them to the FBI when he found documents that revealed Mandel's unusual relationship with one of her patients: Tom Combs, an aide to U.S. Congresswoman Sheila Jackson Lee.

O'Malley knew that Combs was once the city of Houston's HOPWA program coordinator. Before leaving to join Lee's staff in June 1996, Combs helped local AIDS service providers secure several million dollars a year in federal housing money in the form of HOPWA grants.

Combs had been with the city for about a year when he became a patient of Mandel's. O'Malley found weekly records showing that Combs attended ROHA's partial-day hospitalization program from 1994 through early this year. Under state licensing requirements for community mental health centers, day-program clients -- in this case, patients in Mandel's Wellness Program -- are required to attend four hours of group and individual therapy sessions a day, three to five times a week.

That would seem to be quite a burden for Combs, whose current employer, Congresswoman Lee, routinely demands 60- and 70-hour work weeks from her aides. O'Malley says he never saw Combs at ROHA. Tiffany Baugher, a Wellness Program counselor-in-training, says she saw him at sessions about once a month.

But what really floored O'Malley was Combs's apparent business relationship with Mandel. He found evidence that the therapist had been paying Combs's rent, car note and insurance directly, as well as providing the congressional aide monthly cash stipends. Indeed, Combs acknowledges that, until recently, Mandel paid his bills as compensation for consulting work he has performed since 1995 for the River Oaks Health Alliance.

As a congressional aide, Combs is paid $54,000 to work in Lee's Houston office. Somehow, though, between work and his daily therapy sessions, Combs always managed to fit a lot of consulting hours into his busy week: He drives an Infiniti Q45 and lives in an $800-a-month high-rise in Montrose.

Combs clearly reveres Mandel and credits her with helping him survive some trying episodes, including the news that he was HIV-positive.

As for Mandel, she's made a habit of having somewhat complex relationships with her patients. O'Malley was just one former patient who ended up working at ROHA. Another, a former "administrative assistant," found her sessions with Mandel so helpful that she wrote a gushing testimonial for one of ROHA's promotional brochures.

Currently, Mandel has at least three former patients working at either the River Oaks Health Alliance or the H.E.L.P. House -- a situation that, according to Shirley Bibles of the Texas Board of Social Workers Examiners, comes close to a breach of professional ethics. As for Combs, his alleged relationship with Mandel would definitely be "a violation of professional boundaries and would constitute a dual relationship," says Bibles.

"Either you're a client or you're not, or you're a business partner or you're not," adds Bibles. "You can't be both."

By most accounts, the 47-year-old Combs is an energetic, down-to-earth man with a rich business and public-service background. He was elected to the first of three terms on the Beaumont City Council when he was just 20 years old; he also once ran for Congress. One of his nonprofit enterprises, Bid Resources, matched up small and minority businesses with government grants. He has also committed significant time to helping agencies that serve gays, lesbians and people with AIDS -- making him a logical choice to run the city's first HOPWA grant program in 1993. Such experience would suggest that Combs should have known that accepting money, for whatever reason, from someone whose request for tax dollars passed through his hands was, at best, questionable behavior.

Combs admits that when he was the program coordinator, he never divulged that a HOPWA grant applicant also happened to be his therapist. Nor did he reveal that he was being paid by Mandel for what he calls "business planning and development."

Like Mandel, Combs had originally agreed to answer questions from the Press and provide information about his relationship with Mandel. But he changed his mind after several discussions that he requested be held "off the record," and other than verifying dates and other bits of information, offered only this statement:

"I have known JoAnne Mandel for several years. I know her to be a person of integrity and feel that the programs at ROHA have been a great help to many people."

In 1993, the year Tom Combs became the city's HOPWA coordinator, Mandel started a nonprofit organization, the River Oaks Health Association. In October of that year, the association opened the privately funded Transitional Living Center, a four-bedroom house where HIV-positive men could also receive case management services, spiritual guidance and intensive treatment for substance abuse.

Mandel's nonprofit submitted its first application for HOPWA funding in December 1994, and six months later, on June 14, 1995, City Council approved a $175,000 grant for short-term transitional housing at Mandel's new facility, a five-bedroom rental house on Brun. The following day, Mandel submitted a request to the Department of Housing and Urban Development for more than $1 million, which she proposed to use to buy and renovate two small apartment complexes, totaling 18 units.

Mandel noted that the city's HOPWA program coordinator -- Tom Combs -- "played a catalytic role" in developing her proposal, which would place the housing component in the hands of a management company while ROHA managed a "continuum of care system" that would allow residents to move gradually toward independent living.

(Combs said he did not collect a consulting fee for his "catalytic role" and stressed that he encouraged all HOPWA applicants to freely drop his name and job title when necessary.)

For reasons unknown at this point, HUD rejected ROHA's request for funding. But there were some unusual aspects of the proposal that might have caught the eye of someone at the federal housing agency. For instance, Mandel used the term "ROHA" throughout her proposal, without specifying whether she meant the nonprofit association or the for-profit alliance.

That is significant because among the "advantages" she mentioned in her proposal was that the "major" portion of the health care costs would be funded by third-party sources, such as insurance companies. Moreover, as "matching funds," Mandel pledged $432,000 in Medicare and Medicaid reimbursements for the partial-day hospitalization program -- which is run by the for-profit River Oaks Health Alliance, not the nonprofit association that applied for the federal funds.

Perhaps HUD recognized the possibility that uninsured homeless men with AIDS, who were otherwise eligible for HOPWA-funded housing, would be rejected in favor of those whose health-care benefits could pay the freight.

In March, the city housing department awarded Mandel an unrelated $750,000 grant to buy the H.E.L.P. House and to "provide for" counseling, mental-health therapy and substance abuse treatment at ROHA's partial-day hospital.

That means Mandel, who did not mention insurance companies, Medicare or Medicaid in that proposal, must either refer clients to appropriate service providers or have ROHA provide the services. If H.E.L.P. House residents received their treatment from ROHA, the associated costs would be covered by HOPWA funds earmarked for professional fees and contract therapists.

But that's not how Mandel does it, says Susan Ray, the former H.E.L.P. House social worker. Ray helped Mandel administer the city's 1995 grant and was working on a new proposal when she quit last October. According to Ray, H.E.L.P. House residents "didn't have a choice or they didn't have a home."

Gilbert Blair, apparently, has found that to be all too true.
Blair moved to Houston in late February, after being fired from his job as a nurse's aide in New Orleans for showing up drunk at work. He was referred to the H.E.L.P. House, where he hoped a change of scenery and intensive substance-abuse counseling would straighten him out.

Until recently, things had gone fairly well. He completed the Wellness Program in late May, then took a month of classes toward his nursing assistant's certification. But when school ended, he says, Mandel sent word that he needed to get back in the program at least three days a week. He flatly refused.

Three weeks ago, Blair was notified that he would have to move out of the H.E.L.P. House. He has yet to be told why, though HOPWA regulations state that "at a minimum," residents are entitled to a written statement of the reasons for eviction and an opportunity to present their case, with legal counsel present, for review by an independent party. The regulations also say eviction should occur "only in the most severe cases."

Apparently, Blair's only act of "noncompliance" was his refusal to continue attending the River Oaks Health Alliance's Wellness Program -- that, and the two-page letter of complaint he wrote to Mandel, which she had yet to respond to before Blair packed up and moved out on July 5.

"I don't feel like I need any more [therapy]," says Blair. "I made the best of it, but basically I just sat there, talking, from nine to three. One day, they were talking about having us paint the place. I didn't come here to paint JoAnne's place. That's not therapeutic for me."

It wasn't for Steve Berk, either. After the Wellness Program moved from West Clay to 9611 Marlive, Berk says, it took on a "false structure," designed to look good on paper. While the program still proposed to offer a range of therapeutic activity, the reality, he says, was that patients sat in the same hard-backed chairs all day and rarely enjoyed a change of therapists, let alone therapy, more than three times a day.

Jim Hesser, a former resident, says there was "constant mingling" in therapy sessions between the H.E.L.P. House clients, who were mostly receiving substance-abuse counseling, and the more seriously ill residents of the Paraclete Foundation. "There was very little privacy," he says.

A former Methodist minister who took to drinking when his homosexuality forced him to quit the church, Hesser had been sober for a few years when he found himself needing a place to stay. A friend suggested he try the H.E.L.P. House. Mandel, he says, took him in immediately once he told her he was on Medicare.

"I had been there three months or so before I got the first statement, and it was for $14,000," Hesser says. "I was like, 'What? $14,000 for what?' And Medicare was paying $11,000 of that. It was like that for several months and I finally said, 'This is just ridiculous.' But I was in a position where I needed the housing."

Hesser says he left the H.E.L.P. House and moved into a similar arrangement at the nonprofit Milam House because, after he completed the six-week Wellness Program, Mandel tried to make him continue the sessions three times a week.

"She told me I had to keep going to the program," he says. "But, to me, that was just outright, blatant greediness."

Steve Berk has come to the same conclusion, though it pains him to admit it. Berk was a client of Mandel's for about 18 months, he says, minus the four and a half months he spent in jail. Like most therapy patients, he had almost total trust and faith in the therapist. He had no reason to question that commitment to Mandel until May, when he took a closer look at his Medicare statements.

According to those statements, from mid-November through March, Mandel was billing Medicare as much as $560 per day, five days a week. While Berk has been unable to get an accounting of all the time he spent in group and individual sessions, a ROHA employee copied one month's attendance off his chart and gave it to O'Malley, who passed it along to Berk. He was surprised to learn that, over the course of 17 days in January, he attended 89 separate therapy sessions -- an average of more than five a day.

Mandel apparently looked for every opportunity to bill for therapy sessions. Therapists say a two-minute chat with a client in the hallway was an excuse to bill for a one-hour session. Mandel required daily progress notes on each patient, which she claimed were for record-keeping purposes. Therapists later discovered she had used the notes to bill insurance companies or Medicare for more sessions.

Mandel also billed for lunch.
"There were hot meals served at Paraclete, right across the street," says Roxanne Kelly-King, a former therapist. "But JoAnne would not allow them to go. Instead, someone at ROHA would drop off some peanut butter sandwiches or cold cuts, or, on a good day, some stew or chicken soup. And these were supposed to be people with a serious illness. All so she could bill for another hour a day."

Indeed, Mandel had a lot to gain by billing for as many sessions as she could. Her therapists were independent subcontractors, earning $25 to $30 for each session. Because they were required to prepare materials and keep post-therapy charts on their own time, their wages were diluted to about $10 or $15 an hour.

But Mandel was billing third-party insurers at the high end of the market scale for the type of group therapy being provided: $110 an hour (individual sessions cost $135 an hour).

Under ordinary circumstances, Mandel would use the money from Medicare to cover her costs. But all of the costs associated with the care and housing of H.E.L.P. House residents are covered by the HOPWA grant, so Mandel's Medicare reimbursements would seem to represent pure profit.

J.M. Allen, the city's HOPWA coordinator, said he was unaware that a HOPWA grantee appeared to be profiting off the grant. Allen pointed out that such an arrangement would appear to violate federal guidelines that prohibit HOPWA grantees from obtaining "a personal or financial interest or benefit" from the award.

But otherwise, Allen was not inclined to believe the complaints relayed to him about H.E.L.P. House when first contacted by the Press. Apparently, he figured that if none of the clients or employees had griped to him -- "They do know this is a HOPWA program, don't they?" -- how bad could it be?

Of course, Allen had some evidence that all was not right as early as last October, when the city issued a review of ROHA's 1995 grant for $175,000. Mandel had proposed to house 40 HIV-positive men. According to city records, she housed only 13. Meanwhile, she spent a whopping $145,500 of the $175,000 grant on salaries and operating costs.

Allen had more information worth checking out in May, when he received a copy of the complaint Susan Ray filed with the state social workers board. Allen didn't acknowledge that he had been warned that Mandel was discriminating against men who were otherwise eligible for housing. But he didn't exactly deny it, either.

"That would be something we would be concerned with, of course," Allen said. "But no one from her staff or any of the residents has ever made that allegation."

It didn't occur to Allen how much in common that attitude has with JoAnne Mandel herself, who apparently figured that, given their desperate circumstances, her disenfranchised clients would remain silent. Or, perhaps because they also happened to be receiving treatment at a mental-health facility, no one would believe them.

Allen says the city will be "monitoring" the H.E.L.P. House closely, and will be checking out complaints that he recently received from two former residents. That attention comes a little late for Gilbert Blair, who is now spending $400 of his $560 in monthly Social Security benefits on a new apartment. (In what would be another violation of her HOPWA contract, Mandel, according to Blair, never referred him to another agency for rental assistance.)

But Blair remains optimistic, perhaps because there are few things worse than a disease for which there is no cure. His is the kind of New Age attitude that JoAnne Mandel probably read about somewhere along her spiritual path.

"I stuck it out this long because I knew I had no choice," Blair says. "I'll make it the best way I know how.


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