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City to Pay $70 Million in Medicaid Suit

City to Pay $70 Million in Medicaid Suit

Published: October 31, 2011

New York City will pay the federal government $70 million to settle a lawsuit that accused the city of overbilling Medicaid by improperly approving home care for frail and elderly clients, both parties said on Monday.

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In the settlement, the city acknowledged that for a decade, from 2000 to 2010, it had re-authorized personal care for certain patients without having physically obtained the required assessments from doctors, nurses or social workers. The city also admitted that it sometimes did not get "independent medical reviews," as required when there was a dispute over the amount of care needed.

The city presented the case as a dispute over what Michael Cardozo, the city's corporation counsel, called "technical record-keeping deficiencies and nothing more." Federal officials, however, said that the requirements were important because they determined the payment of huge amounts of money.

Mr. Cardozo said the city had acted in the good-faith belief that the services being provided were appropriate.

"These services allowed poor and infirm New Yorkers - among our most vulnerable population - to remain in their homes and live independently," Mr. Cardozo said.

Preet Bharara, the United States attorney for Manhattan, reacted angrily to Mr. Cardozo's contentions that the settlement reflected a mere technical problem, and that it accounted for "less than half of 1 percent" of the $18 billion cost of the program in the city over 11 years. He noted that the Justice Department's original complaint, filed in January, had alleged tens of millions of dollars in improper billing, and that the settlement was within that range.

"It is unfortunate that Mayor Bloomberg's counsel would contradict the stipulations that he personally signed and submitted to the court, in which he acknowledged that the settlement was fair and reasonable," Mr. Bharara said. "The city's argument that this case was about 'paperwork' was specifically rejected by Federal District Court Judge Jed Rakoff when he denied the city's motion to dismiss this case."

In its statement on Monday, the Justice Department did not explicitly contest whether patients needed the care they were getting, which could include housecleaning, dressing, bathing and shopping and could cost $75,000 to $150,000 a year.

But Mr. Bharara said the settlement took "an important step toward restoring the integrity of this program and ensuring that all beneficiaries get the level of care and service they require and to which they are entitled."

The case was brought as the result of a complaint by a whistle-blower, Dr. Gabriel Feldman, an independent medical reviewer in a private agency under contract to the city. Dr. Feldman will receive $14.7 million of the $70 million settlement.

The False Claims Act, under which the case was brought, is typically used to prosecute doctors who, for example, bill Medicaid for tests they did not really conduct.

City officials said they were distressed by the use of the law in this case because the city had received no financial benefit from the payments that were being challenged. Mr. Cardozo said the law was being used to "resolve funding disputes among governmental entities."

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