Whistleblowers Share in $13.4 Million Hospital Fraud Settlement

New York Downtown hospital has agreed to pay $13.4 million to resolve claims that it defrauded Medicare and Medicaid by submitting false claims for an inpatient detoxification program.

The settlement is the result of lawsuits brought by two individuals under the qui tam provisions of the False Claims Act.  A qui tam lawsuit allows private individuals to sue on behalf of the government to recover money paid out as the result of false claims.  The individuals brining the lawsuit are called “relators.”

As a reward for blowing the whistle on fraud, the relators will receive between 15% and 25% of the total amount recovered by the government.  In this case, that means a reward of between $2 million and $3.35 million.

After the whistleblower lawsuit was filed, the government conducted an investigation.  The investigation revealed that the hospital and a Missouri-based company, Special Care Hospital Management Corporation, operated an inpatient drug and alcohol detoxification program under the name New Vision without having received a license from the New York State Office of Alcoholism and Substance Abuse Services.

Because the program was unlicensed, New York Downtown Hospital was not entitled to bill Medicare and Medicaid for treatment provided by the program.  All claims submitted to Medicare and Medicaid, therefore, were considered “false claims.”

The government’s investigation also established that the hospital paid Special Care Hospital Management for patient referrals.  Payments of kickbacks in return for patient referrals violate federal and state anti-kickback statutes.  Any services provided as a result of those kickbacks are ineligible for reimbursement from Medicare and Medicaid.

New York Downtown Hospital is a community teaching hospital affiliated with the prestigious New York-Presbyterian Healthcare System and Weill Cornell Medical College.  The hospital denied the government’s allegations but agreed to settle the lawsuits by paying $13.4 million to the state and federal governments.

The false claims were brought to the government’s attention by two whistleblowers at the hospital, Dr. Mathew I. Gelfand and Enrico Montaperto, when they filed qui tam actions under the False Claims Act.  Dr. Gelfand and Mr. Montaperto will now share in the whistleblower’s reward.

If you are aware of questionable payments for referrals or false claims submitted to Medicare or Medicaid, then you should consult with an experienced healthcare attorney immediately to protect your rights.  To schedule a free and confidential consultation by telephone or in person, call my office today at (917) 652-6504 or click here to communicate with me via email.

John Howley
New York, New York

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