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AG Schneiderman announces joint state, federal $2.95M settlement with hospitals in Mount Sinai Health System

August 24, 2016 Brooklyn Daily Eagle
Attorney General Eric Schneiderman. AP Photo/Mike Groll
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Attorney General Eric T. Schneiderman and U.S. Attorney Preet Bharara announced on Wednesday that three hospitals in the Mount Sinai Health System are paying a total of $2.95 million to resolve allegations that the hospitals knowingly retained more than $844,000 in overpayments made by Medicaid in violation of the federal and New York False Claims Acts. 

Knowing retention of an overpayment from the government for more than 60 days is known as a “reverse false claim” and is a violation of both federal and state false claim acts. The entities involved include Mount Sinai Beth Israel, Mount Sinai St. Luke’s and Mount Sinai Roosevelt — and the hospitals’ former partnership group, Continuum Health Partners, Inc. The Mount Sinai Health System was formed in September 2013, when Continuum Health Partners combined the hospitals’ operations with those of Mount Sinai Medical Center. New York state’s share of the settlement is more than $1.7 million.

“Repaying Medicaid for false claims is not only vital to the integrity of the program, but it is also the law,” said Schneiderman. “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.”

“My office’s audits first revealed the computer problem causing improper Medicaid claims, leading to today’s settlement in this case,” state Comptroller Thomas P. DiNapoli said. “Taxpayers should not have to foot the bill for waste, fraud and abuse of Medicaid. We will continue to partner with Attorney General Schneiderman in rooting out corruption in the Medicaid system.”

Medicaid is a jointly funded federal-state program that provides health care to needy individuals. Pursuant to Medicaid regulations, the hospitals were only entitled to receive payment for services rendered to Medicaid managed-care patients from their contracted managed care organization, and were not permitted to seek additional payments from Medicaid or, with certain limited exceptions, the patients. 

The settlements resolve allegations in complaints filed by the state and U.S. in federal court that, as early as February 2011, the defendants (the hospitals) became aware that they had wrongly billed Medicaid as a secondary payor for more than $844,000 worth of claims in 2009 and 2010, and that defendants knowingly avoided fully reimbursing Medicaid for those payments until March 2013.

As part of the settlements, the defendants admitted that, beginning in 2009 due to a software compatibility issue, a coding error caused the defendants to submit claims for payment above and beyond what they had received from the managed care organization, and that Medicaid paid these claims as a secondary payor. In September 2010, the New York Office of the state comptroller brought to Continuum’s attention a small number of these claims, and the defendants admitted that in late 2010 they were made aware of the coding error.  The defendants admitted that in late 2010 and January 2011, Continuum employees gathered and analyzed Continuum’s billing data in order to discover possibly affected claims, and that on Feb. 4, 2011, an employee (and the whistleblower in this case) sent an email to certain members of Continuum’s management, attaching a spreadsheet containing 890 claims, of which 444 had been erroneously billed to Medicaid. 

Continuum terminated the employee four days later, on Feb. 8, 2011. Continuum reimbursed Medicaid in February 2011 for only five of the improperly submitted claims. The defendants admitted that Continuum never brought the employee’s analysis to the attention of government regulators. Thereafter, the defendants did not fully reimburse Medicaid for claims erroneously billed to Medicaid for over two years, and did so in more than 30 tranches after February 2011, beginning in April 2011 and concluding in March 2013.

This investigation was initiated after a whistleblower filed a lawsuit under the qui tam provisions of the federal and New York False Claims Acts, which allow private persons, known as relators, to file civil actions on behalf of the government and share in any recovery. The relator in this case will receive from the state a $354,000 share of the settlement proceeds after full payment by the defendants. 

The investigation and settlement were the result of a coordinated effort between the U.S. Attorney’s Office for the Southern District of New York, and the New York State Attorney General’s Office.  Schneiderman would like to thank the Office of the New York State Comptroller for its assistance in the matter.  

The case is captioned United States and the State of New York, ex rel. Robert P. Kane v. Healthfirst, Inc., et al., and is docketed with the U.S. District Court for the Southern District of New York under Civil Action No. 11 Civ. 2325 (Ramos, J.).

The state case was handled by Special Assistant Attorney General Alee N. Scott, Senior Counsel Carolyn Ellis and Senior Audit-Investigator Deowattie Persaud. The Medicaid Fraud Control Unit is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan. 

—Information from AG Schneiderman’s Office


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