AN UNHOLY DEAL FOR ST. LUKE'S

Hospital Double-Billed For Out-Patient Psychiatric Services

Schneiderman: Blatantly Irresponsible Behavior Cost Tax Payers Millions, Will Be Repaid In Full With Penalties And Interest

The suit was filed under state and federal False Claims Acts. As part of the settlement filed in Manhattan Federal Court, the hospital agreed to repay Medicaid and Medicare $2,325,000. New York's share in the settlement, which is due in ten days, is $1,066,887.83.

"This blatantly irresponsible behavior by a New York City hospital cost taxpayers millions of dollars and will not be tolerated by this office," Attorney General Schneiderman said. "As a result of New York's strong False Claims Act, whistleblowers with knowledge of such unlawful conduct have an incentive to file complaints. My office investigates those claims, we pursue those who cheat the system and we make sure tax dollars are fully refunded and penalties are paid."

After receiving information from a whistleblower alleging the Hospital and SLR Psychiatric Associates ("SLR"), a physician's group within the Hospital, were improperly double billing the state Medicaid and federal Medicare programs, the Attorney General's Medicaid Fraud Control Unit and the Civil Frauds Unit of the United States Attorney's Office for the Southern District of New York opened an investigation and confirmed the whistleblower's allegation.

According to the Complaints and Settlements filed in this case, the Hospital double-billed the State of New York and the federal government for psychiatric services provided by the Hospitals' physicians at SLR, in two ways:

1. The Hospital billed out-patient psychiatric services to Medicaid as a rate-based service, which included the care provided by the physician and all other related costs. At the same time, SLR billed the state and federal governments on a fee-for-service basis for the same care provided by the physician;
2. The Hospital sought and received reimbursement from Medicare for non-reimbursable costs relating to outpatient psychiatric visits conducted by SLR. As a result, the Hospital received Medicare and Medicaid payments that it was not entitled to receive.

As part of the Settlement, which was approved by United States Circuit Court Judge Denny Chin, the Hospital has admitted responsibility for the following conduct:

• From 1999 to 2002, the Hospital sought and received Medicare reimbursement for non-reimbursable costs relating to outpatient psychiatric visits conducted by SLR.
• From 1998 through 2002, the Hospital and SLR overbilled New York State and the United States in connection with claims for reimbursement under Medicaid relating to outpatient psychiatric visits conducted by SLR. Specifically, SLR submitted claims and received reimbursement under Medicaid for costs that were already included in, and reimbursed to the Hospital pursuant to, separate claims submitted by the Hospital.
• From 2003 through 2010, the Hospital submitted claims and received reimbursement under Medicaid for services furnished by physicians in the Hospital's outpatient mental health clinic. Department of Social Services regulations provided that "the costs of routine physicians' services are included in facilities' rate or fee and shall not be billed separately." The Hospital billed for such physician services separately, although the Hospital had removed the physician costs from its institutional cost report.

This settlement is based on a whistleblower lawsuit brought by a private individual in 2008 pursuant to state and federal false claims acts and filed in the U.S. District Court for the Southern District of New York.

Attorney General Schneiderman thanks the whistleblower, the U.S. Attorney's Office for the Southern District of New York and the New York State Office of Mental Health for their cooperation and assistance throughout the investigation.

The case was handled by Deputy Regional Director Thomas O'Hanlon and Special Assistant Attorney General Carolyn Ellis under the supervision of Assistant Deputy Attorney General Paul Mahoney and Special Deputy Attorney General Monica Hickey-Martin. The investigation was conducted by Senior Special Investigator Frederick Rondina under the supervision of Deputy Chief Investigator Thaddeus Fischer; and by Special Auditor Investigator Nicholas Thottam, under the supervision of Supervising Special Auditor Yehuda Scheff and MFCU New York City Regional Chief Auditor Thomasina Piccolo-Smith.