Press Releases

Manhattan U.S. Attorney Announces $7 Million Civil Fraud Settlement With Westchester County Hospital

Wednesday, October 24, 2012

Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has filed and simultaneously settled a civil fraud lawsuit against the WESTCHESTER COUNTY HEALTH CARE CORPORATION, doing business as the Westchester Medical Center (“WMC”) for submitting false reimbursement claims to Medicaid, a joint federal and state program that provides financial assistance to individuals with low incomes for medical care. The Government’s Complaint alleges that WMC billed Medicaid for millions of dollars of outpatient services at its mental health center that lacked the core documentation required by Medicaid regulations. The settlement, approved today in Manhattan federal court by U.S. District Judge Colleen McMahon, requires WMC to pay $7 million in civil damages under the False Claims Act.

Manhattan U.S. Attorney Preet Bharara stated: “Medicaid is a vital resource for people who suffer from physical and mental illnesses and related conditions. We have absolutely no tolerance for those who fail to comply with the program, particularly in these lean times when budgets are stretched thin and belts are being tightened. We will continue to work with our federal and state partners to protect the Medicaid program against waste, fraud and abuse.”

According to the Complaint filed today in Manhattan federal court:

WMC, a public hospital located in Valhalla, New York, is home to one of the largest public mental health facilities in the County, the Behavioral Health Center (the “BHC”). The BHC operates as a hospital-based mental health and hygiene provider licensed by the New York State Office of Mental Health (“OMH”) and the New York State Department of Health (“DOH”). The BHC also provides outpatient behavioral health services to children, adolescents and adults who are mentally ill or suffer from psychiatric or emotional conditions. Medicaid, which reimburses providers for the cost of care for its recipients, paid millions of dollars in reimbursement for claims submitted by WMC for these mental health services. As such, it must comply with Medicaid regulations. Those regulations expressly require that mental health outpatient clinics maintain certain documents, including progress notes and treatment plans, to ensure that billed services are actually provided, and that the providers are in compliance with the regulations.

From August 2001 through June 2010, WMC repeatedly billed Medicaid for outpatient mental health services without having the core documentation required by the Medicaid regulations in order to bill for those services. Further, WMC management knew for years that the outpatient mental health clinics were missing documentation. Until at least June 2010, WMC failed to take any but the most insignificant steps to address the problem, or to conduct any systematic audit of the clinics’ records. WMC also did not return funds it received from the Medicaid program despite knowing it had been substantially overpaid as a result of having billed for services for which it lacked proper documentation. As a result of this billing fraud, WMC was paid millions of dollars by the Medicaid program to which it was not entitled.

Under Medicaid, the federal and state governments share the costs of care for its recipients. Accordingly, WMC is also entering into a settlement agreement today with New York State that provides for the payment from WMC to the state of its share of the Medicaid funds.

*                      *                      *

The case is being handled by the Office’s Civil Frauds Unit. Mr. Bharara established the

Civil Frauds Unit in March 2010 to bring renewed focus and additional resources to combating

financial fraud.

The Civil Frauds Unit works in coordination with President Barack Obama’s Financial

Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and

Commodities Fraud Working Group. President Obama established the interagency Financial

Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to

investigate and prosecute financial crimes. The task force includes representatives from a broad

range of federal agencies, regulatory authorities, inspectors general, and state and local law

enforcement who, working together, bring to bear a powerful array of criminal and civil

enforcement resources. The task force is working to improve efforts across the federal executive

branch, and with state and local partners, to investigate and prosecute significant financial

crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat

discrimination in the lending and financial markets, and recover proceeds for victims of financial


Mr. Bharara praised the audit work of the New York State Office of the Medicaid Inspector General that was instrumental to the federal investigation.

This case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorneys Heidi A. Wendel and Mara E. Trager are in charge of the case.


U.S. v. Westchester Cty Health Care Corp. Complaint(PDF)

U.S. v. Westchester Cty Health Care Corp. Settlement(PDF)



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