The state reached a $13.4 million settlement with New York Downtown Hospital to resolve a fraud case that involved billing Medicaid for unnecessary services and paying kickbacks for referrals to an unlicensed drug and alcohol treatment program, Attorney General Eric Schneiderman announced today. The hospital received illegal payments on claims for unlicensed inpatient treatment services provided to patients who were illegally referred to the out-of-state program—SpecialCare Hospital Management Corp. of Missouri.
Schneiderman said his office and the U.S. Attorney’s Office of False Claims Act conducted a probe based on allegations made by two whistleblowers. As a result of the probe, the state and federal government filed complaints-in-intervention with seven New York Hospitals, including St. Joseph’s Medical Center in Yonkers. Settlement negotiations are ongoing with St. Joseph’s, according to the state.
Under the settlement with New York Downtown Hospital, $12.6 million will be returned to the Medicaid program, which provides health care for poor and disabled New Yorkers, and $800,000 to the federal Medicare program, which serves the elderly and disabled.
“Drug and alcohol treatment programs are designed to help people struggling with addiction. By exploiting this need in order to maximize revenue, New York Downtown Hospital wasted Medicaid resources and illegally billed taxpayers for unlicensed and medically unnecessary treatment services,” Schneiderman said in a statement.
Downtown Hospital set up an illegal patient-referral scheme with SpecialCare that was disguised as an “administrative service agreement.” The hospital paid the vendor $38,500 in exchange for referring Medicaid patients to its unlicensed detoxification unit, Schneiderman said.
New York and the federal government filed complaints-in-intervention against six other New York hospitals, SpecialCare Hospital Management Corp. and SpecialCare CEO Robert McNutt. The state and federal government settled four years ago with Our Lady of Mercy Medical Center in the Bronx. There are agreements in principle with Columbia Memorial Hospital in Hudson and SpecialCare Management Corp. There are settlement negotiations with Benedictine Hospital in Kingston and Long Beach Medical Center in Nassau County. New Parkway Hospital in Queens is bankrupt.