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Justice News

Department of Justice
U.S. Attorney’s Office
Northern District of New York

FOR IMMEDIATE RELEASE
Monday, August 4, 2014

New York City To Pay More Than $1 Million To Resolve Medicaid False Claims Act Lawsuit

New York City Human Resources Administration Accepts Responsibility for Causing
Managed Care Organizations to Insure Individuals who were Ineligible
for Benefits through New York State’s Medicaid Program

ALBANY, NEW YORK – The City of New York has agreed to pay the United States $1.05 million to settle allegations that the New York City Human Resources Administration (HRA) violated the False Claims Act by causing various insurance companies (known as “managed care organizations” or “MCOs”) to provide health care coverage to individuals that HRA knew, or should have known, were ineligible to receive Medicaid benefits through New York State’s Medicaid program, according to United States Attorney Richard S. Hartunian.

Medicaid is a matching program in which the United States shares with the States the cost of medical services for low income and disabled individuals. Several MCOs have contracted with the State of New York to provide health care coverage to Medicaid beneficiaries who reside in New York City in exchange for fixed monthly payments. Many individuals who qualify for Medicaid also receive assistance under the federal Supplemental Security Income (SSI) program, which provides financial assistance to the elderly, blind, and disabled. In many States, including New York, SSI recipients automatically qualify to receive Medicaid benefits. When a Medicaid beneficiary residing in New York City moves to another State and enrolls for SSI benefits, the federal government provides written or electronic notification to the New York State Department of Health (DOH), which administers the Medicaid program throughout New York. Once DOH receives this information, it must promptly forward it to HRA. HRA, in turn, has an obligation to quickly review the information and, where appropriate, close a beneficiary’s Medicaid case if it determines that the beneficiary has moved out of New York City. If HRA fails to timely close a Medicaid case after learning from DOH or from another source that the beneficiary has relocated to another State, the MCO insuring that person will continue receiving monthly payments to insure an individual who is no longer eligible for Medicaid coverage in New York.

The United States’ investigation revealed that, although MCOs on several occasions notified HRA in writing that certain beneficiaries may have moved out of State, HRA failed to appropriately follow up on that information and work with DOH to ensure that MCOs stopped receiving monthly payments. As part of the settlement, HRA accepted responsibility for failing to timely review and close certain Medicaid cases after being provided information that those beneficiaries may have moved outside of New York City, and it admitted that its inaction caused one or more MCO to receive payments to insure individuals who were ineligible for benefits through New York State’s Medicaid program. HRA also agreed as part of the settlement to establish a process to investigate and close Medicaid cases whenever it receives information suggesting that a Medicaid beneficiary no longer resides within its coverage area.

United States Attorney Hartunian said: “Safeguarding public dollars is one of this office’s top priorities. When the United States entrusts other entities to administer federally funded programs, they must ensure that government funds are put to proper use. With today’s settlement, HRA has accepted responsibility for its past inaction and agreed to implement measures that will help ensure scarce taxpayer dollars are not wasted paying MCOs in New York to insure individuals who have moved to other States. I would like to thank the agents and auditors from the United States Department of Health and Human Services’ Office of Inspector General for their diligent efforts bringing this matter to a successful conclusion.”

“This settlement is yet another example of OIG’s commitment to ensuring that federal health care programs are administered with integrity,” said Thomas O’Donnell, Special Agent in Charge, United States Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York Regional Office.

The government’s investigation was triggered by a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, which allow private persons, known as “relators,” to file civil actions on behalf of the United States and share in any recovery. The relator in this case will receive $175,000 from the settlement.

The investigation and settlement were the result of a coordinated effort between the United States Attorney’s Office for the Northern District of New York and HHS-OIG. The United States was represented by Assistant United States Attorney Adam J. Katz.

Updated January 29, 2015