US Sues NYC for Medicaid Fraud

January 12, 2011 Updated: January 13, 2011

NEW YORK—New York City is facing a civil lawsuit for overbilling “at least tens of millions of dollars” in Medicaid claims. The federal government filed the suit earlier this week, claiming not only that city administrators knowingly overcharged the Medicaid program, but that they also failed to provide appropriate health care for elderly citizens in the process.

Personal Care Service is a Medicaid program that provides elderly individuals with 24-hour care. The city is exempt from contributing to the costs of this program—about $75,000 to $150,000 per person annually. The federal government alleges that the city placed patients in Personal Care Service, on the federal dollar, instead of assigning them to other programs more suited to their needs, which the city would have to pay for.

Enrollment in Personal Care Service requires approval from a qualified health care professional. This approval is missing in the cases of a “substantial percentage” of the 17,500 individuals who have received 24-hour care since 2000, claims the lawsuit.

The lawsuit lists several examples of patients allegedly not properly assigned to the Personal Care Service. A 65-year-old woman was deemed to only need limited care, being of sound mind and body. Instead, she was provided with 24-hour care on the federal government’s bill.

A physician recommended a 75-year-old woman to be placed in a psychiatric facility, as she regularly attempted to harm herself and her daughter. However, she was enrolled in the Personal Care Service and stayed home instead. She was repeatedly re-approved for the service without consent from a qualified health care professional.

“It goes without saying that ultimate medical decisions about patient care should be made by doctors and nurses, not government bureaucrats, and they should be based first and foremost on the best interests of the patient,” stated Manhattan U.S. Attorney Preet Bharara in the complaint.

“The Human Resources Administration takes its responsibility to administer the program seriously and is reviewing the complaint,” said Carmen Boon, a spokeswoman for the city agency responsible for administering Medicaid, in a statement.

This is not the first time the city has been charged with shifting the Medicaid costs to the federal government. In July 2009, New York City and New York state paid $540 million to settle allegations of false claims made on school-based health care programs. That case set a record for the largest sum recovered by the U.S. government for Medicaid. The city and state were accused of passing on claims for services they knew were not covered, “all to make the United States pay a larger share of New York’s Medicaid costs,” according to a Department of Justice press release from that time.

In December 2010, the city cut $3.3 million from Case Management, a program that serves the home-bound elderly. The program provides seniors with a case worker who regularly checks in to make sure they are healthy, safe, and receiving all of the benefits that they need. The city’s Department of the Aging has had $60 million trimmed from its budget since 2008.