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Justice News

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

FOR IMMEDIATE RELEASE
Wednesday, August 24, 2016

Manhattan U.S. Attorney Announces $2.95 Million Settlement With Hospital Group For Improperly Delaying Repayment Of Medicaid Funds

Continuum Admits That It Did Not Fully Reimburse Medicaid For Erroneously Billed Claims For Over Two Years

Preet Bharara, the United States Attorney for the Southern District of New York, Scott J. Lampert, Special Agent in Charge of the New York Field Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), Eric Schneiderman, New York State Attorney General, and Thomas P. DiNapoli, the New York State Comptroller, today announced a $2,950,000 settlement of a civil fraud lawsuit against Beth Israel Medical Center d/b/a Mount Sinai Beth Israel (“Beth Israel”), St. Luke’s-Roosevelt Hospital Center d/b/a Mount Sinai St. Luke’s and Mount Sinai Roosevelt (“St. Luke’s Roosevelt,” and together with Beth Israel, the “Hospitals”), and Continuum Health Partners, Inc. (“Continuum,” and together with the Hospitals, “Defendants”) for willfully delaying repayment of over $ 800,000 in Medicaid overpayments.  The settlement resolves claims under the federal False Claims Act and the New York State False Claims Act. 

Manhattan U.S. Attorney Preet Bharara said:  “When Continuum learned that it had received over $800,000 in potential overpayments from Medicaid in 2011, it had an obligation under the law to return those funds within 60 days.  Instead, Continuum delayed repayment for more than two years and only fully repaid the Medicaid program in 2013.  With this settlement, Continuum has made admissions and is paying $2.95 million for its fraud on Medicaid.”

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Any threat to the financial health of Medicaid is a threat to the vulnerable citizens who depend upon it for critical services.  Today’s settlement should send a message to providers that this behavior will not be tolerated, and we will pursue justice in these cases.”

Attorney General Eric Schneiderman said:  “Repaying Medicaid for false claims is not only vital to the integrity of the program, but it is also the law. We will not allow hospitals to drain important resources from the system, and will continue to ensure that the program is properly reimbursed for the funds that it is owed.”

New York State Comptroller Thomas P. DiNapoli said:  “Our audits of the defendants revealed $700,000 in Medicaid overpayments.  After we were contacted about this matter, we quickly partnered with law enforcement to recover taxpayer dollars, including further overpayments that came to light only afterwards.  I thank U.S. Attorney Preet Bharara and his office for their perspicacity in seeing that justice was served.  There have been too many cases of Medicaid waste, fraud and abuse, and we will continue to partner with law enforcement to combat Medicaid fraud statewide.”

The United States Complaint-In-Intervention (the “Complaint”) alleges that between 2009 and 2010, CONTINUUM erroneously submitted claims to Medicaid for payment due to a software error.  In 2010, Continuum was alerted to the software error by the New York State Comptroller.  In February 2011, an internal investigation by CONTINUUM identified approximately 900 claims totaling over $1 million that may have been wrongly submitted to and paid by Medicaid.  This list, created by the whistleblower who filed this qui tam lawsuit, contained all of the claims that were affected by the software glitch.  Rather than using the list to repay the claims, CONTINUUM terminated the whistleblower, failed to bring this list to the attention of the Government and took nearly two years to complete its repayments.  Specifically, between 2009 and 2010, DEFENDANTS erroneously billed 444 claims to Medicaid.  These claims were identified in the whistleblower’s list on February 4, 2011, yet DEFENDANTS did not fully repay these claims until March 2013, i.e., nearly two years later, in violation of a Federal law requiring recipients of Government funds to repay the Government within 60 days of discovering the overpayment. 

DEFENDANTS moved to dismiss the Government’s Complaint and, in a first-of-its-kind decision, Judge Edgardo Ramos denied the motion in an opinion that was referred to in the New York Law Journal as “the most significant case interpretation” of the “reverse false claims provision” of the federal False Claims Act.  Brian Feldman, Health Care Overpayments and Reverse False Claims, New York Law Journal, September 8, 2015. 

Today, U.S. District Judge Edgardo Ramos approved a settlement to resolve the Government’s claims against DEFENDANTS.  Under that settlement, DEFENDANTS agree to pay $2,950,000 to resolve the claims under the federal and New York false claims acts.  In the settlement, DEFENDANTS admit, acknowledge and accept responsibility for the following conduct:

  1. During the relevant time period, the Hospitals had managed care agreements with Healthfirst, Inc. (“Healthfirst”), a managed-care organization (“MCO”), and rendered care to numerous patients who obtained their Medicaid managed-care plans through Healthfirst.Pursuant to their contracts with Healthfirst, the Hospitals obtained from Healthfirst contractually fixed managed-care payments for services rendered to the Healthfirst beneficiaries.

  2. Pursuant to Medicaid regulations, the Hospitals were entitled to receive as payment for services rendered to Medicaid managed-care patients only the amount paid by the MCO and were not permitted to seek additional payments from Medicaid or, with certain limited exceptions, the patients.

  3. Beginning in or around 2009, due to a software compatibility issue, the Healthfirst remittances contained coding that caused the Hospitals and Continuum to mistakenly submit claims on behalf of the Hospitals to the Medicaid program, as a secondary payor, for additional payment for services rendered to enrollees of Healthfirst, above and beyond what they had received from Healthfirst for these services, and Medicaid paid Beth Israel and St. Luke’s Roosevelt for such claims.

  4. In September 2010, the New York Office of the State Comptroller (the “Comptroller”) brought to Continuum’s attention a small number of claims submitted by Continuum on behalf of the Hospitals that had been wrongly billed to Medicaid as a secondary payor.

  5. In late 2010 and January 2011, Relator and other Continuum staff members gathered and analyzed Continuum’s billing data in order to discover possibly affected claims.

  6. On February 4, 2011, Relator sent an email to certain members of Continuum’s management, attaching a spreadsheet (“Relator’s Spreadsheet”) containing 890 claims of which 444 had been erroneously billed to Medicaid.

  7. Continuum terminated Relator on February 8, 2011.Continuum reimbursed Medicaid in February 2011, for only five of the improperly submitted claims.

  8. In March 2011, and continuing through February 2012, the Comptroller brought additional affected claims to Continuum’s attention, at which time Continuum would return the overpayments.

  9. Continuum never brought Relator’s analysis to the attention of the Comptroller.

  10. Continuum did not fully reimburse Medicaid for claims erroneously billed to Medicaid for over two years and did so in more than thirty tranches after February 2011, beginning in April 2011 and concluding in March 2013.

The Complaint in this case was filed under the federal 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, and the Office of the New York Attorney General for their assistance in this case.

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

Topic(s): 
Health Care Fraud
Press Release Number: 
16-231
Updated August 24, 2016