On August 20, 2021, the New York Attorney General announced an indictment of a Bronx woman for defrauding New York state out of millions of dollars in false Medicaid claims. The woman, who did business as a community center and a transportation broker company, allegedly scammed individuals, and taxpayers through an illegal scheme totaling more than $4 million.
The scheme advertised a fake housing assistance program to lure low-income New Yorkers into providing their personal information, including their Medicaid numbers. The woman then used their personal information to submit false claims for custom-molded back braces to a Medicaid-funded managed care organization, for braces that were not needed and never ordered by patients.
In the indictment, the Office of the Attorney General’s (OAG) Medicaid Fraud Control Unit (MFCU) alleges that the Bronx woman regularly used social media to advertise a sham housing assistance program as a ploy to lure low-income New Yorkers to her community center. The community center then required New Yorkers to divulge personally identifiable information, including their Medicaid numbers, in order to qualify for the purported program. Instead of helping the New Yorkers to find housing, the woman used their personal information to submit false claims to a Medicaid-funded managed care organization for highly customized back braces. Occasionally, the recipients were provided a $20 back brace that was mailed directly from Amazon; however, the majority of the time she provided no brace at all. The Medicaid-funded managed care organization was billed between $750 and $1,550 per back brace.
The indictment charges the Bronx woman with one count of Grand Larceny in the First Degree- a class B felony, one count of Health Care Fraud in the First Degree- a class B felony, one count of Money Laundering in the first degree- a class B felony, and five counts of Identify Theft in the First Degree- a class D felony. In addition, companies owned and controlled by the woman are also charged with one count of Money Laundering in the First Degree. If convicted on the top charge, she could face up to 25 years in state prison.
In conjunction with the criminal case, the OAG has also filed a civil complaint against the Bronx woman’s businesses. The complaint, which asserts violations of New York’s False Claims Act, Section 145-b of New York’s Social Services Law, and other causes of action, seeks to recover millions of dollars in Medicaid money obtained by these defendants as a result of their fraudulent conduct.
Compliance Perspective
Issue
It is extremely important that all members of the healthcare team are aware of what may be considered a false claim or a kickback. Ensure that all staff are aware that these violations can occur whether they are intentional or unintentional. Failure to promptly report a false claim or kickback can result in lawsuits, fines, and other sanctions. Additional information is available in the Med-Net Corporate Compliance and Ethics Manual, Chapter 1 Compliance and Ethics Program, CP 2.3 General Legal Duties and Antitrust Laws.
Discussion Points
- Review policies and procedures for preventing and reporting a false claim or anti-kickback statute violation. Update your policies and procedures as needed.
- Train all staff on the False Claims Act and Anti-Kickback Statute and what can be considered a false claim or kickback. Include information on how to report concerns and suspected violations, and that prompt reporting is mandatory. Document that the trainings occurred and place in each employee’s education file.
- Periodically audit staff to ensure that they are aware of what should be done if they suspect a false claim or illegal kickback has occurred, whether intentionally or unintentionally. Conduct audits of documentation and billing routinely to prevent and detect errors before they progress to a false claim.
