Government Intervenes in Qui Tam Action Accusing New York Public Schools of Medicaid Fraud

The United States government recently joined a qui tam action filed against the New York City Department of Education (DOE). According to the allegations, the city’s DOE fraudulently billed Medicaid for multiple sessions of psychological counseling that were never provided to students.


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The DOE can submit monthly counseling claims for special needs students who meet Medicaid’s requirements, so long as the students are provided a minimum of two psychological counseling sessions each month. If the minimum number of sessions are not provided, then the DOE is ineligible for reimbursement. For each student the DOE provides these counseling services, Medicaid pays a flat fee of $223.

The government alleged that between the years of 2001 and 2004, the DOE knowingly submitted bogus reimbursement claims to Medicaid concerning the mandatory number of counseling sessions for special needs students. The DOE allegedly billed for a number of counseling services that were never provided.

For example, the DOE fraudulently billed Medicaid for counseling services provided to one particular student for a duration of 15 months during school years 2001 through 2003. Although Medicaid was billed for at least two counseling sessions each month, a review of their own records showed that the student did not receive the mandatory number of sessions that would allow for Medicaid reimbursement. In fact, during at least 12 months out of 24, the student received less than two counseling sessions.

In yet another instance of fraudulent activity, the DOE had billed Medicaid for several one-hour psychological counseling sessions, although they were ultimately unable to produce any form of documentation that would warrant those claims.

The violations fall under the False Claims Act, which allows the government to seek treble damages in addition to civil penalties per violation. Each claim that was submitted for a student who received less than two sessions in a given month is to be considered to be a violation of the Act. As a result, the DOE fraudulently obtained at least $693,418 in Medicaid funds. In its False Claims Act lawsuit, the government is seeking treble damages, costs and penalties from the DOE in excess of $2 million.

New York’s Medicaid Fraud Issues

In the state of New York, more than two-thirds of the estimated 168,000 special needs students meet financial requirements to qualify for Medicaid. Only recently did Congress begin to allow school districts the ability to file for Medicaid reimbursement. In New York, there is a city manager in charge of handling these claims.

New York spends more on Medicaid services than any other state in the country. The state’s per capita Medicaid spending exceeded other states by at least $1,500 during 2010. In 2012 alone, the state shelled out $54 billion for services.

Medicaid Spending

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Medicaid Fraud Whistleblower

Details of the DOE’s fraud were originally brought to light in a qui tam action filed by a whistleblower in 2007. Dana Ohlmeyer, a DOE social worker, has worked in the city school system since 1992. She first learned of the fraudulent billing scheme when she was asked to provide reimbursement claims for students who did not meet the required number of counseling sessions.

Unsettled by the situation, Ohlmeyer researched how to report Medicaid fraud and retained a False Claims Act attorney. She later filed her own qui tam action against the DOE. For her participation and private qui tam action, Ohlmeyer will be entitled to a monetary award if the government is successful in proving its claims against the DOE.

“We will vigorously investigate and prosecute allegations of fraud on federal programs, especially in programs where the intended recipients of services are vulnerable children with special needs,” said Brooklyn U.S. Attorney Loretta Lynch.

By | 2018-03-26T04:21:03+00:00 June 11th, 2013|Healthcare Fraud|