New York Downtown Hospital will pay a total of $13.4 million in a Medicare and Medicaid fraud settlement that alleged the hospital received claims on an unlicensed inpatient drug detox program and that it paid kickbacks to an out-of-state vendor for referrals to the program.
Under the terms of the settlement, announced yesterday by New York State Attorney General Eric T. Schneiderman, the hospital will pay $12.6 million to the state and federal government to settle the Medicaid claims, and another $800,000 to the federal Medicare program.
"Drug and alcohol treatment programs are designed to help people struggling with addiction. By exploiting this need in order to maximize revenue, New York Downtown Hospital wasted Medicaid resources and illegally billed taxpayers for unlicensed and medically unnecessary treatment services," said Schneiderman, in a press release announcing the settlement.
The complaint alleged that the hospital's New Vision program did not have an operating certificate to operate its inpatient detoxifications services and that, additionally, it paid a monthly management fee to SpecialCare Hospital Management Corp. for its referral of patients to the program in direct violation of state and federal anti-kickback laws.
The scheme was first brought to the attention of authorities by two whistleblowers from New York Downtown Hospital, Mathew I. Gelfand, MD and Enrico Montaperto, under the False Claims Act.
The subsequent investigation by the New York Attorney General's office and the United States Attorney's Office led to the filing of Complaints-In-Intervention against seven New York hospitals, SpecialCare Hospital Management Corp. and SpecialCare CEO Robert McNutt for making false claims to Medicaid and Medicare.
New York Downtown Hospital made no admission of liability in the settlement.
"The current leadership is pleased to get these allegations – which date back over ten years – behind us. The hospital can now focus its efforts on continuing to provide the highest quality healthcare to the downtown community," noted spokesman Fred Winters, in a statement to WNYC News.