News and Press Releases

Home Health Care Agency Agrees to Pay $1.6 Million to Resolve Civil Fraud and Administrative Overpayment Claims

May 03, 2006

ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, announced that VISITING NURSE ASSOCIATION HEALTH CARE SERVICES, INC., (“VNAHCS”) of Staten Island, New York, has agreed to pay double damages in a civil health care fraud case for defrauding the Medicare program by inflating its home health aide visit costs for 1995 and 1996. The $1.6 million payment also includes the recoupment of overpayments for prior years.

Until 2001, Medicare reimbursement rates for home health agencies were computed based on the information that they reported in annual cost reports about the types and costs of skilled nursing and home health aide services provided to patients, many of whom are Medicare beneficiaries. VNAHCS filed a civil action in the United States District Court for the Eastern District of New York challenging a decision by the Department of Health and Human Services (“HHS”) to adjust VNAHCS’s 1995 cost report and decrease the amount of Medicare reimbursement due for home health aide services. HHS had determined that VNAHCS improperly included non-Medicare like costs in calculating the costs of home health aide visits in violation of the Medicare Act, regulations, and policy statements. In responding to the complaint, the government asserted counterclaims under the False Claims Act for cost years 1995 and 1996, based on the reporting of inflated data and false statements in the cost reports certifying that the home health agencies had followed the applicable standards and that they had complied with the cost reporting instructions, despite knowingly and intentionally disregarding them.

In a reported decision,1 the district court upheld HHS’s decision and granted summary judgment to the United States on its counterclaims, finding that the home health agencies were liable for damages and penalties under the False Claims Act.

The United States and VNAHCS subsequently reached a settlement regarding the amount of damages to be paid in the court case as well the amount to be paid to resolve potential administrative overpayment claims for earlier years. With respect to the court case, VNAHCS is paying $653,837, which represents double damages less amounts already recouped by HHS through the administrative overpayment process. In addition, VNAHCS is paying $946,163 to settle potential administrative recoupment claims for cost years 1989 through 1994, for which reopening notices are pending. VNAHCS has also agreed to withdraw a related mandamus action and all administrative appeals relating to the computation of is Medicare reimbursement rates for home health aide services for cost years 1989 through 2000.

“The settlement reached in this case reflects our commitment to vigorously investigate and prosecute fraud in the Medicare Program,” stated United States Attorney MAUSKOPF. “Health care providers who violate the rules will be held accountable to the full extent of the law.”

The government’s case was handled by Assistant United States Attorney Kathleen A. Mahoney. Substantial assistance was provided by United Government Services, the fiscal intermediary responsible for reviewing VNAHCS’s Medicare cost reports pursuant to contract with the Centers for Medicare & Medicaid Services.


1 Visiting Nurse Association of Brooklyn v. Thompson, 378 F. Supp. 75 (E.D.N.Y.\ 2004).

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