LK Whistleblower Attorneys' Client Receives $14.7 Million from $70 Million Settlement in Medicaid Fraud Case against NYC

Whistleblower attorneys at Levy Konigsberg LLP help uncover pervasive 10-year fraud on American taxpayers, perpetrated by the City of New York, winning a $14.7 Million reward for the firm's qui tam client, a physician who helped U.S. taxpayers recover $70 Million by sparking federal investigation into City’s alleged Medicaid fraud scheme. The whistleblower, a double-board-certified physician with three master’s degrees, had publicly testified that NYC had not followed Federal and State Medicaid regulations since 1993, inflating cost of a program placing 24-hour aides with recipients to help with shopping, cleaning, bathing and other non-medical tasks.

NEW YORK, New York, November 1, 2011 - City of New York defrauded America’s taxpayers for a decade, ignoring longstanding state regulations to give thousands of Medicaid recipients around-the-clock aides to help with shopping, cleaning and other non-medical tasks at a cost of $75,000 to $150,000 a year per recipient. The city caused the federal government to pay for Medicaid patients’ treatment and care without the underlying documentation needed to establish and authorize medical eligibility, according to a whistleblower lawsuit settled yesterday for $70 million1, qui tam attorney Alan J. Konigsberg, of Levy Konigsberg LLP ("LK"), announced.

A founding partner of the law firm, who leads its qui tam practice, Konigsberg, along with Theresa A. Vitello, a false claims act attorney at LK, represent a double board certified medical doctor with three master’s degrees whose public complaints about abuses in the city’s Personal Care Services ("PCS") Program went unheeded for years until they filed the federal False Claims Act lawsuit on his behalf.

The whistleblower, who receives a $14.7 million reward for helping to expose the city’s fraudulent activity, is serving his second stint as a Local Medical Director ("LMD") for the nine city Community Alternative Systems Agencies or ("CASAs"), which serve as PCS evaluating offices under the Human Resources Administration ("HRA"). New York State offers the only PCS Medicaid home-health program of its kind in the United States and, under state law, LMDs are supposed to decide whether Medicaid recipients qualify for costly 24-hour care.

Included among the non-medical tasks 24-hour home health aides perform are helping with shopping, cleaning, escorting recipients to the toilet, bathing and doing laundry. Under New York State PCS rules, aides are not allowed to dispense medicine, or even touch pills that are to be taken by Medicaid recipients, Konigsberg explained.

For years Gabriel Ethan Feldman, MD, MPH, MBA, MHA, FACPM complained internally and publicly about the city’s improprieties in connection with the PCS program. Once the whistleblower attorneys at LK filed his qui tam lawsuit in November 2009, the extent of the Medicaid fraud was revealed by the government’s investigation, Konigsberg said.

Dr. Feldman testified publicly before the New York City Council Joint Committee on CASA in 1993, stating that the city’s PCS program was causing the government to make unjustified payments representing, "…hundreds of millions of dollars in Medicaid waste." He also complained repeatedly to his supervisors at the New York County Health Services Review Organization ("NYCHSRO") and then, only as a last resort, filed the whistleblower lawsuit in another attempt to correct PCS abuses.

"New York City institutionalized Medicaid fraud, flouted state law, and continued to do so even after our client told the world in 1993 what was happening," said Konigsberg, whose qui tam law firm has helped return millions to state and federal taxpayers in a major national off-label pharmaceutical, Medicaid, and nursing home fraud settlements and currently is involved in several healthcare fraud lawsuits, including one involving therapy services to nursing homes.

The U.S. Government reimburses half of New York State’s Medicaid costs, estimated at $40 billion-plus and the largest of any state in the U.S. In order for New York State to receive federal Medicaid reimbursement the city was required to adhere to state health department rules and regulations including a multi-step assessment process before prior approval is granted for a PCS home health worker to provide routine supportive assistance for a Medicaid recipient. In this case the city totally ignored the rules, according to the federal Complaint-In-Intervention settled today.

During the 10 years ending in 2010 covered by the Government’s Complaint2, approximately 17,500 persons received around-the-clock care under the New York City Medicaid program. Potential damages to the United States in the, "tens of millions of dollars were alleged," according to the Complaint.

Known legally under False Claims laws as the "relator," Dr. Feldman is board certified in preventive medicine and public health and a fellow of the American College of Preventive Medicine. He serves as an LMD for NYCHSRO, which is contracted with the city, and has performed thousands of PCS medical reviews for it.

In the original Complaint3 filed by the Medicaid fraud attorneys at LK, Dr. Feldman alleged that local HRA directors in dealing with LMDs used "high pressure tactics" to force PCS approvals for unqualified patients; instructed them to approve patients when required documents were not submitted; said patients should not be referred to other social service programs that could better serve them; and admitted that no CASA followed State Health Department Regulations. Even a NYCHSRO supervisor told Dr. Feldman to violate rules and, among other things, admit medically unstable patients to the program, according to the Complaint.

Dr. Feldman was born in Brooklyn and graduated from Brandeis University. He received his medical degree from the Sackler School of Medicine, a New York State Program at Tel Aviv University, Israel. In addition, he has Master’s Degrees in Public Health, General Public Health from New York Medical College; and Business Administration and Health Administration from Georgia State University. From 1990 to 1993 he served as an LMD for NYCHSRO. Later he was a medical specialist for the New York City Department of Health; National Director of the American Cancer Society’s Colorectal Cancer and Prostate Cancer Division of Cancer Control; and Director of Cancer Prevention and Control Programs for the New York City Department of Health. In 2006 he returned to work for NYCHSRO as an LMD, rotating among the city’s nine CASA districts.

"The value of federal, state and city False Claims Acts (FCAs) to return falsely billed dollars to taxpayers is clear as a bell in this case," Vitello said. "Until we filed this Medicaid fraud case on behalf of our client, New York City continued cavalierly to flout New York State law. It took our whistleblower team, working with Dr. Feldman and then federal authorities, to settle this matter, put sanity back to the city’s PCS process, and return $70 million to taxpayers."

In today’s settlement with the United States under the federal False Claims Act, the city admitted that it did not follow state regulations and promised to do so in the future.

Konigsberg lauded the excellent work of the U.S. Attorney’s Office for the Southern District of New York, under the direction of United States Attorney Preet Bharara; Assistant U.S. Attorney Heidi A. Wendel, Civil Frauds Unit Chief; and Assistant U.S. Attorney Rebecca C. Martin, Civil Frauds Unit Deputy Director and HCF Coordinator. Assistant U.S. Attorneys Daniel P. Filor, Sarah North, Allison Penn and Li Yu, also represented the Government.

Under the Federal False Claims Act, qui tam actions allow private citizens with knowledge of fraud to help the Government recover ill-gotten gains and additional civil penalties. The law allows the Government to collect up to three times the amount it was defrauded, in addition to civil penalties from $5,500 to $11,000 per false claim.

In successful whistleblower lawsuits in which the Government intervenes, whistleblowers are typically entitled to receive awards representing 15-to-25 percent of qui tam recoveries. Dr. Feldman received 21 percent, Konigsberg noted. In addition to the Federal False Claims Act, 29 states, New York City, Chicago, and Allegheny County, Pennsylvania, have similar qui tam statutes to rewarding whistleblowers who expose fraud and false billing.

ATTENTION: If you have knowledge and evidence of federal, state or local false billing anywhere in the United States concerning Medicaid or any other government-paid product or service contact a whistleblower lawyer at Levy Konigsberg LLP at 212-605-6200, or toll free at 1-800-988-8005.

1 Story is also covered in major newspapers:

2 See attached a scanned copy of the U.S. Government’s First Amended Complaint;
3 See attached a scanned copy of the original complaint.

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