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Press Release

Suny Research Foundation to Pay $3.75 Million to Resolve False Claims Act Liability

For Immediate Release
U.S. Attorney's Office, Northern District of New York

Grant Recipient Admits that it Submitted False Statements to the Federal Government
Relating to New York State’s Medicaid and Children’s Health Insurance Programs

ALBANY, NEW YORK: The Research Foundation for the State University of New York has agreed to pay the United States $3,750,000 to resolve allegations that its Center for Development of Human Services (CDHS) violated the False Claims Act by manipulating audits it performed of federally funded health care programs in New York State, announced United States Attorney Richard S. Hartunian.

The Research Foundation is a nonprofit educational corporation whose mission includes supporting research for the State University of New York. CDHS is a Research Foundation program headquartered at Buffalo State College, with offices in Albany, Buffalo, Syracuse, Rochester, and New York City. In 2007, Research Foundation entered into a contract with the New York State Department of Health to review and report to the federal government information concerning eligibility for New York State’s Medicaid and Children’s Health Insurance Programs (CHIP). These audits – known as the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) reviews – were designed to measure, among other things, errors in local determinations as to which New York State residents were eligible to receive Medicaid and CHIP benefits during the period of October 1, 2007 through September 30, 2008.

The settlement resolves allegations that CDHS manipulated both the PERM and MEQC audits by prescreening and altering the cases selected for inclusion in what were supposed to be random sample reviews of New York State’s Medicaid and CHIP eligibility determinations. CDHS, which cooperated during the investigation, acknowledged in the settlement agreement that it submitted false statements to the Centers for Medicare & Medicaid Services pertaining to New York State’s eligibility error rates. Based in part on the findings of the investigation, Research Foundation adopted enhanced compliance measures, including appointing a Chief Compliance Officer to oversee the administration of the activities it sponsors.

United States Attorney Hartunian said: “The effort to provide better health care to more people at a lower cost depends on the faithful application of Medicaid eligibility requirements and the reduction of erroneous payments based upon accurate information provided by independent reviewers. In this case, the Center for Development of Human Services failed to fulfill its contractual obligation, as a federal grant recipient, to deliver the accurate and reliable information necessary to maintain the integrity of the Medicaid program. We will continue to pursue vigorously entities that deliver substandard work on taxpayer-funded projects and violate the public trust by falsifying information to receive federal funds.”

“CDHS skewed its audits of New York health care programs for its own gain. We will not tolerate such schemes, which waste scarce federal taxpayer dollars and undercut the integrity of public health care programs,” said Thomas O’Donnell, Special Agent in Charge, United States Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York region.

The government’s investigation was triggered by a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, which allows private persons, known as “relators,” to file civil actions on behalf of the United States and share in any recovery. The relators in this case will receive $825,000, which is 22% of the settlement proceeds. The case is docketed with the United States District Court for the Northern District of New York under number 10-cv-385.

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, the Department of Justice’s Civil Division (Fraud Section), and HHS-OIG. Locally, the United States was represented by Assistant United States Attorney Adam J. Katz.

Updated February 10, 2015