A federal judge Friday suspended an independent inquiry at a troubled Chicago psychiatric hospital that is set to lose its federal funding.

After pressure from the American Civil Liberties Union of Illinois and state lawmakers, the Illinois Department of Children and Family Services had agreed to the review of Aurora Chicago Lakeshore Hospital after multiple allegations of abuse and neglect of children treated at the facility in the city’s Uptown community.

But with all the children in state care removed from hospital, and the imminent loss of crucial government funding, DCFS and the ACLU agreed the investigation was no longer necessary.

“I’m not interested in wasting anyone’s time,” U.S. District Court Judge Jorge Alonso said of the investigation, though he said some examination of what went wrong was still needed.

Federal authorities last week announced they were terminating Lakeshore’s Medicare agreement Dec. 15. Several people familiar with the issue expect that Medicaid decertification will follow.

Lakeshore officials have said in the past that the hospital receives most of its funding from Medicare and Medicaid and would be forced to close if government funding were lost.

However, a hospital spokesman said in an email Friday that Lakeshore was open “and plans to remain open.” Some employees have been let go, he said, because admissions have been lower than normal.

DCFS has relied on Lakeshore to treat hundreds of children in its care, including some other hospitals refused to admit. But the ACLU, which monitors DCFS as part of a decades-old federal consent decree, demanded the review and called on DCFS to stop sending children to the hospital following separate investigations by ProPublica Illinois and the Chicago Tribune. The last of the children in DCFS’ care were removed from the hospital Nov. 30.

That does not mean DCFS should stop working to understand the circumstances that led to the troubles at Lakeshore and what could be done to prevent them in the future, Alonso said at the hearing Friday.

“The purpose of the independent review was to look at the safety and care and treatment of DCFS youth, and there’s nobody there to assess the safety of,” said Neil Skene, special assistant to DCFS Acting Director Beverly “B.J.” Walker.

He said DCFS is trying to determine where it can send children who need psychiatric treatment.

Heidi Dalenberg, the ACLU’s general counsel, reiterated the need for DCFS to examine what happened at Lakeshore as part of a broader assessment of children in the department’s care sent to psychiatric hospitals. In some cases, children have been held at the hospitals after doctors have cleared them for release because DCFS cannot find them more appropriate homes.

“Some of these kids are in treatment for months and months on end,” she said.

ACLU attorneys said they will seek assistance from former federal judge Geraldine Soat Brown, who was assigned as a “special master” in the case Friday, to ensure an internal review of DCFS’ role is completed. Brown’s appointment was the first time in more than two decades that a “special master,” or monitor, has been named.

Neither DCFS nor the ACLU will consent to sending children to Lakeshore until after a review is completed, but “that review won’t occur for now given the shaky footing of the hospital,” Dalenberg said.

The Medicare announcement followed an investigation by the Illinois Department of Public Health that found Lakeshore did not ensure patients were free from sexual and physical abuse. The department reviewed the hospital’s incident log from January to October and found 60 allegations of inappropriate sexual behavior and 70 allegations of physical assault on the children’s unit, records show. Officials also reported that the hospital did not have an adequate quality improvement program.

As federal officials move forward with the termination of Medicare funding, the public health department is considering suspending or revoking the hospital’s license, said Melaney Arnold, a department spokeswoman.

Lakeshore can appeal the decision or re-apply for certification. The hospital’s CEO has said the facility works hard to meet the highest standards of treatment and is working to comply with federal regulations.

He has not addressed specific allegations of misconduct at the facility.

Dr. Michael Naylor, a child psychiatrist and director of the behavioral health and welfare program at at the University of Illinois at Chicago, had been tapped to lead the independent review. He acknowledged the serious concerns at Lakeshore, but also said the hospital was known to take children who had been “blacklisted” from other mental health facilities across the state and praised the expertise of Lakeshore’s doctors.

“I’m really hoping that Lakeshore will be able to remediate whatever has been identified as needing remediation and they can come online again because they were good partners to DCFS,” Naylor said. “It’s going to take a lot of work, re-education, intense supervision, but I think it’s the best outcome.”

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