New York's Continuum Cheats Medicaid: Pays $2.95M for Violating ACA 60-Day Rule

Three New York Mount Sinai hospitals have agreed to pay $2.95 million to resolve claims they failed to repay over $844,000 in false claims submitted to New York Medicaid in the allotted 60-day timeframe. Whistleblower Robert Kane will receive a $354,000 cash award for filing the initial False Claims Act (FCA) lawsuit that led to the investigation.

Continuum Submits False Claims to New York Medicaid Due to Software Error

Kane’s whistleblower lawsuit alleged that, between 2009 and 2010, a computer software error led Continuum Heath Partners, Inc. to submit $844,000 in claims to New York Medicaid for payment. The New York State Comptroller informed Continuum of the software error in 2010, prompting Continuum to conduct an internal investigation.  In February 2011, Continuum’s technical director for operations, whistleblower Robert Kane, found that the software might have affected 890 claims valued at over $1 million that New York Medicaid had already paid Continuum.

Hospital Fires Robert Kane, Ignores Internal Reports of New York Medicaid False Claims

Continuum terminated Kane four days after he informed senior management of the overpayments and ignored the long list of false claims. Soon after, Kane filed a whistleblower lawsuit on behalf of the state of New York and the federal government under the FCA. Investigators found Continuum has erroneously billed 444 claims to New York Medicaid.

ACA: Hospitals Must Repay Medicaid Overpayments within 60 Days

The Affordable Care Act (ACA) requires recipients of government funds to repay overpayments within 60 days of discovery. Continuum did not repay New York Medicaid the $844,000 in overpayments until March 2013, two years after Kane’s February 2011 notification.

“When Continuum learned that it had received over $800,000 in potential overpayments from Medicaid in 2011, it had an obligation under the law to return those funds within 60 days,” said Manhattan U.S. Attorney Preet Bharara. “Instead, Continuum delayed repayment for more than two years and only fully repaid the Medicaid program in 2013.”

Judge Ramos Denies Dismissal: New York Hospitals Had Sufficient Knowledge to Identify Overpayments

The defendants in the case, Mount Sinai Beth Israel, Mount Sinai St. Luke's-Roosevelt and Continuum, filed a motion to dismiss the complaint in 2014. U.S. District Judge Edgardo Ramos set precedent with his decision to deny the motion, concluding that the defendants had sufficient knowledge to identify the overpayments.

Judge Ramos’ opinion explains overpayments are “identified” when a provider has “actual knowledge of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.” Brian Feldman analyzes Judge Ramos’ precedent-setting opinion the New York Law Journal, calling the case “the most significant case interpreting the so-called ‘reverse false claims’ provision of the New York and federal False Claims Acts.”

New York Hospitals Admit to Wrongdoing: Pay $2.95 Million Settlement

Judge Ramos approved the $2,950,000 settlement amount to resolve the claims under the New York and federal FCAs.  Attorney General Eric Schneiderman announced New York State will receive over $1.7 million. The United States will receive $1.25 million. As part of the settlement, the defendants admitted to having knowledge of the overpayments, failing to notify the Comptroller and delaying repayment for more than two years.

“Any threat to the financial health of Medicaid is a threat to the vulnerable citizens who depend upon it for critical services,” said U.S. Department of Health and Human Services, Office of Inspector General Special Agent in Charge Scott J. Lampert. “Today’s settlement should send a message to providers that this behavior will not be tolerated, and we will pursue justice in these cases.”

New York Whistleblowers Paid Cash Awards for Reporting New York Medicaid Fraud

Whistleblower Robert Kane filed his complaint under the federal FCA, which allows private individuals to file suit on behalf of the government and collect between 10% and 30% of any government recovery. Attorney General Schneiderman announced Kane was awarded $354,000 of the $2.95 million settlement for his efforts in putting a stop to the fraud.

New York health care professionals and others working with New York Medicaid are in the unique position to discover cases of Medicaid fraud against the State of New York and the federal government. Whistleblowers whose cases are successful in recovering government funds are paid whistleblower cash awards often falling in the hundreds of thousands to millions of dollars range. If you have knowledge of New York Medicaid fraud, submit your report. Help put a stop to fraud and collect your cash reward.


Medicaid Fraud Hotline: 888.742.7248 or Report Online