New York City Settles Medicaid Fraud Allegations


New York City schools pay $1.3 million to settle allegations of false claims involving Medicaid reimbursements for special needs children’s services.
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The False Claims Act is designed, in part, to protect taxpayers from paying for services reimbursed by Medicare or Medicaid that either did not take place or did not conform to Medicaid and Medicare guidelines. One common example of non-conformation involves submission of claims for medical services performed by a nurse or office staff member as opposed to the physician, which is required for most procedures covered by federal healthcare agencies. As today’s case reveals, federal Medicaid laws are also intertwined with the public school system and provide reimbursement for certain physical and mental health services provided to students in need. As with all Medicaid reimbursements, the procedure must comply with applicable Medicaid rules or the submission for reimbursement could be considered a false claim.

NYC Department of Education Pays $1.37 Million

Under its arrangement with Medicaid, the New York Department of Education receives $233 per child in need of psychological counseling services from school counselors, provided the child receives at least two sessions per month. If the enrolled child does not receive his two regular sessions per month, the Department must forfeit the reimbursement for that particular child.

In a recent settlement between the Department and the U.S. government, New York’s Department of Education paid $1.37 million to settle whistleblower allegations it collected regular reimbursements for counseling services never rendered and consistently failed to provide special needs students with at least two counseling sessions per month as required by regulations. By example, one record revealed the provision of just two counseling sessions for a covered student over a 12-month period, despite the Department’s collection of reimbursement for fifteen consecutive months.

Parties’ Reactions to Settlement

In a statement by U.S. Attorney for the Eastern District of New York, the DOJ reiterated its dedication to protecting Medicaid resources by stating: “When Medicaid shells out scarce dollars for services that are not provided, both the students in need of psychological support and the public fisc are harmed. We will vigorously pursue entities, including local governmental agencies that seek reimbursement of federal funds to which they are not entitled.”

The Department of Education remained firm in its position that it did not deliberately bilk Medicaid out of funds but that its errors were the result of the mismanagement of records. Specifically, senior counsel of the New York City Law Department stated that the settlement was in the “best interests of the city” and “[there was no] wrongdoing. It was simply a matter of being unable to locate certain documentation from 10 or more years ago.”

The whistleblower in the case, a Department of Education social worker, is set to receive over $206,000 for her role in exposing the issue and filing a claim. The DOJ opted to intervene in this case in October, 2012.

The Devil Is in the Details

If you are aware of possible fraud or mismanagement of records similar to the facts of this case, be sure to contact a whistleblower attorney as soon as possible. The FCA is designed to combat mismanagement of taxpayer funds, regardless of how or why the false invoices are submitted. For more information about the qui tam process, contact a whistleblower attorney today.

By | 2018-03-26T05:00:26+00:00 January 30th, 2014|False Claims Act Legal News|