Manhattan U.S. Attorney Files Civil Fraud Suit Against Hospital Group For Fraudulently Delaying Repayment Of Nearly $1 Million Of Medicaid Overcharges

Preet Bharara, the United States Attorney for the Southern District of New York, and Thomas P. DiNapoli, the New York State Comptroller, today announced the filing and unsealing of a civil fraud lawsuit against CONTINUUM HEALTH PARTNERS, INC. (“CONTINUUM”), BETH ISRAEL MEDICAL CENTER d/b/a MOUNT SINAI BETH ISRAEL (“BETH ISRAEL”), and ST. LUKE’S-ROOSEVELT HOSPITAL CENTER d/b/a MOUNT SINAI ST. LUKE’S and MOUNT SINAI ROOSEVELT (“SLR”) for the hospitals’ fraudulent delay in fully repaying nearly $1 million in Medicaid overpayments for almost two years after it had discovered the overpayments. Federal law requires that when a recipient of Government funds discovers it has been overpaid, it must repay the Government within 60 days, but the hospitals in this case did not complete their repayments for nearly two years, and then only after repeated Government inquiries.

Manhattan U.S. Attorney Preet Bharara said: “The law requires hospitals that receive federal funds to which they are not entitled to promptly return them. They cannot just keep the money – after learning that they should not have received it – in the hopes that the government will not figure it out. To do so is fraud. I want to thank the office of New York State Comptroller Thomas DiNapoli, a frequent partner in these types of cases, for their excellent work in this investigation.”

New York State Comptroller Thomas P. DiNapoli said: “New York State’s Medicaid program costs taxpayers more than $50 billion annually. Fraud in the Medicaid program affects all New Yorkers and will not be tolerated. Audits and investigations by my office have found billions of those dollars lost to waste, fraud and abuse. We will continue to work with federal and state law enforcement to combat Medicaid fraud statewide. I thank U.S. Attorney Preet Bharara for his efforts to prosecute this case, which stemmed from the work of my office, and bring unscrupulous providers to justice.”

According to the allegations in the Government’s Complaint filed in Manhattan federal court:

CONTINUUM submitted hundreds of improper claims to Medicaid in 2009 and 2010 on behalf of BETH ISRAEL and SLR, totaling nearly $1 million, due to a software problem. These claims arose from care provided to patients enrolled in a Medicaid Managed Care Organization (the “MCO”), which contracted with healthcare providers. Under the applicable Medicaid regulations, these providers were entitled to receive as payment for care rendered to the enrolled patients only the amount paid by the MCO and were not entitled to obtain additional payments. A computer glitch caused the MCO erroneously to indicate to its contracted providers, including BETH ISRAEL and SLR, that they should seek additional reimbursement from Medicaid for the healthcare services they provided to the enrollees. CONTINUUM, on behalf of BETH ISRAEL and SLR, thus submitted the improper claims to Medicaid, and received payment for most of them.

Despite becoming aware of the software issue in late 2010 and, further, being provided in early February 2011 with a spreadsheet by a CONTINUUM employee who had identified virtually all of the claims affected by the issue, CONTINUUM and the hospitals failed to take appropriate steps to timely repay the claims. Instead, their repayments occurred only as the Office of the New York State Comptroller brought groups of potentially affected claims to CONTINUUM’s attention, over the course of more than a year. CONTINUUM and the hospitals repaid the remaining approximately 300 affected claims only after this Office issued a Civil Investigative Demand to CONTINUUM in June 2012, and the repayments were completed only in early 2013.

The Complaint in this case was filed under the False Claims Act, which punishes violators who submit false claims to the Government or knowingly attempt to avoid an obligation to repay federal funds. The allegations of fraud stated in the Complaint were first brought to the attention of the Government by a whistleblower, who filed a lawsuit under the qui tam provisions of the False Claims Act. Those provisions allow private parties who have knowledge of fraud committed against the Government to file suit on behalf of the Government and share in any recovery. The United States may then intervene and file a complaint, as it did here.

Mr. Bharara praised the investigative work of the Office of the State Comptroller. He also thanked the U.S. Department of Health and Human Services, Office of Inspector General, for its assistance in this case.

The case is being handled by the Office’s Civil Frauds Unit. Civil Frauds Unit Co-Chief Rebecca C. Martin and Assistant U.S. Attorney Jean-David Barnea are in charge of this matter.

U.S. v. Continuum HealthPartners, Inc., et al. Complaint-In-Intervention