State University of New York Expected to Pay $1 Million to Settle Audit Fraud Allegations

The SUNY Research Foundation is facing possible False Claims Act liability for altering Medicaid data during an audit.

According to the details of an ongoing probe by the Department of Justice, State University of New York’s Research Foundation is alleged to have directed its researchers and employees to falsify the results of an audit of the state’s Medicaid program – thereby rendering a greater number of applicants eligible for benefits than would otherwise have been covered by the program. The investigation was initiated following the whistleblower lawsuit commenced by several former auditors, who courageously came forward with their allegations of fraud.

Despite convening a grand jury, the Department of Justice has concluded that no individuals will face federal or state criminal charges in the matter. However, SUNY may be required to pay up to $1 million to settle the matter.

Medicaid audits & False Claims Act liability

The False Claims Act is triggered anytime an individual, business, private entity, or government agency submits claims to the federal government that are intentionally false, exaggerated, inflated, or based on non-existent transactions. Thus, in order for the Health Department and SUNY’s Research Foundation to face liability under this statute, there must be some sort of federal government regulation in play.

Under Section 1001 of the Medicare Drug, Improvement and Modernization Act of 2003, states are now required to initiate audits of Medicaid programs in order to “ensure the appropriate use of Medicaid DSH payments and compliance with the statutorily imposed hospital-specific limits.”  States are given three years to complete each audit, and an audit report must be submitted for every fiscal year beginning with 2005. Completion of correct audits is a requirement for the receipt of Medicaid funds, and failure to adhere to the mandates of the audit procedure can result in loss of Medicaid assistance and possible False Claims Act liability.

Details of the fraudulent scheme at the SUNY Research Foundation

To perform its audit, the State of New York initiated a contract with the Research Foundation, supervised by the New York State Department of Health. The audit, once completed, would maintain New York’s eligibility in the Medicaid program, which survives on matched funds by the federal government. For the upcoming fiscal year, New York was expecting to receive approximately $22 billion from the federal government to match its own investment in the healthcare program.

According to a complaint filed by several former employees, directors of the audit program at the Research Foundation instructed auditors to manipulate data in order to expand the breadth of the program and allow additional, otherwise-ineligible enrollees the opportunity to receive benefits.

According to reports, the State of New York and its quasi-public Research Foundation are expected to pay $1 million to settle the matter. The size of the whistleblower reward is unclear at this point. Pursuant to the settlement, the Research Foundation is expected to acknowledge breakdowns in its work process. However, neither party is expected to admit fault or liability in the matter (a common caveat to a settlement agreement).

The Health Department has thus far paid over $1.4 million to defend itself against the allegations.

Contact Berger Montague today

If you are aware of healthcare fraud or fraud involving a government contract or regulation, please contact our office right away. A whistleblower attorney can help you determine whether you may be able to initiate your own False Claims Act lawsuit, which can result in a reward of up to 30 percent of the total recovery.

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By | 2018-03-26T00:18:36+00:00 November 12th, 2014|Grant Fraud|