Home health companies in Brooklyn to pay $17.25M for wage violations and fraud

October 1, 2024 Robert Abruzzese, Courthouse Editor

The companies were accused of violating the federal and New York State False Claims Acts by failing to provide minimum wages and benefits to their home health aides despite certifying compliance with the law to receive Medicaid funds. Photo: zinkevych/Adobe Stock

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Two Brooklyn-based home health care agencies, Edison Home Health Care of New York LLC and Preferred Home Health Care of New York LLC, have agreed to pay a combined $17.25 million in settlements to resolve allegations of Medicaid fraud and wage underpayment, federal and state officials announced.

The settlement, which involves a $9.75 million payment to the Medicaid program and $7.5 million in unpaid wages to more than 25,000 current and former employees, was the result of a joint investigation led by the Office of the United States Attorney for the Eastern District of New York and the New York State Attorney General’s Office.

“Home health aides work long hours at difficult, often thankless tasks to ensure that the vulnerable individuals who they provide services to are properly cared for,” said U.S. Attorney Breon Peace. “These aides deserve the hard-earned benefits guaranteed them under the law, and my office will ensure that they are accurately compensated.”

The agencies violated the New York Wage Parity Act, which sets minimum wage and benefits requirements for home health aides providing services to Medicaid recipients in New York City, Nassau, Suffolk and Westchester counties.

Edison Home Health Care’s Brooklyn Recruitment Office at 930 McDonald Ave., where workers sought employment and later claimed they were underpaid. Screenshot via Google Street View

Home health aides are predominantly women, many of whom are immigrants and people of color. They perform demanding personal care tasks for homebound patients, including bathing, dressing and feeding. The physically and emotionally challenging work can often last up to 24-hour shifts. The Wage Parity Act was enacted to address the inequities these workers face and to ensure they receive fair compensation.

Aides in these areas are currently entitled to receive a base wage of $18.55 per hour plus additional benefits. The investigation revealed that Edison and Preferred underpaid their aides by diverting funds intended for wages and benefits into improper expenditures, such as purchasing “stop loss” insurance — a form of employer protection for high medical costs.

Edison and Preferred’s underpayments came to light after whistleblowers filed complaints under the federal and state False Claims Acts. Following the government’s investigation, the companies admitted to actions that fell short of wage and benefit requirements under the Wage Parity Act.

Under the agreement, Edison and Preferred will pay $7.5 million in back wages to affected employees. They must also pay $9.75 million to resolve claims of Medicaid fraud, with $3.9 million going to the federal government and $5.85 million to New York State. In addition, the agencies have committed to revising their policies and procedures, conducting employee training, and providing regular compliance reports for the next three years. If the agencies fail to comply, they face additional penalties and enforcement actions.

This settlement is the largest secured to date under the Wage Parity Act by both the New York Attorney General’s Office and the U.S. Attorney’s Office for the Eastern District of New York.

“Home health aides provide crucial care to our most vulnerable neighbors and loved ones, and they deserve to be paid for their hard work,” said Attorney General James. “Edison and Preferred cheated employees out of years of pay and cheated New York taxpayers by defrauding Medicaid for their own benefit.”