STATE
RECOVERS $76.5 MILLION IN MEDICAID OVERPAYMENTS
FROM STATEN ISLAND UNIVERSITY HOSPITAL
Attorney General Spitzer today announced that Staten Island University Hospital ("SIUH") has agreed to repay taxpayers $76.5 million to resolve allegations that the hospital fraudulently overbilled the Medicaid program for services provided at 21 clinics and that it also caused the state to pay a wrongly inflated reimbursement rate for patient visits at more than 500 clinics over a three-year period.
Spitzer said, "In negotiating this settlement, we were committed to both recovering restitution for the Medicaid program and maintaining health care for the people of Staten Island. Fraudulently obtained monies have been returned, long-term board reforms are in place, and health care levels for the community will be maintained."
The settlement is the result of an investigation conducted by the Attorney General’s Medicaid Fraud Control Unit.
According to a Complaint, filed yesterday in connection with the settlement, SIUH and CHAPS Community Health Services, Inc. ("CHAPS") fraudulently billed for services at 21 part-time clinics. To encourage hospitals to deliver services to Medicaid patients in remote or underserved communities, New York State paid them an enhanced rate to operate part-time clinics. For providing services in these clinics – up to 60 hours per month – Medicaid paid physicians as much as eight times the rates for the same services provided in other settings.
According to the Complaint, beginning in 1999, at a time when SIUH was facing severe financial shortfalls, the hospital embarked upon a fraud consisting of knowingly billing Medicaid at the premium part-time clinic rate for thousands of hours of services delivered in clinics that were not truly part-time clinics. This conduct followed an earlier investigation by the Attorney General’s office of the hospital’s part-time clinics which had been settled in late 1999 and which required the hospital to repay Medicaid $45 million.
The Complaint additionally alleges that hospital executives had been repeatedly warned that the practice was illegal, and that the hospital was in danger of becoming, in their attorneys’ words, a "scofflaw."
The Complaint also charges that, as part of the scheme, SIUH and CHAPS executives repeatedly misled DOH about the hours of operation and compliance with other regulations. For example, at one junction, SIUH falsely stated that the clinics were breaching the part-time restrictions due in large part to an influx of patients "as a result of the terrorist attack on September 11, 2001." In fact, the practice had begun years earlier.
Further exacerbating
the problem, according to the Complaint, SIUH and CHAPS executives submitted
inaccurate financial information to DOH in a certified document used to
determine the premium rate that the SIUH clinics would receive. As a result,
CHAPS and SIUH received millions of dollars more from Medicaid than they
were entitled to receive for services delivered at all 500 CHAPS clinics.
Today’s settlement also resolves a determination by DOH that CHAPS
had received several million dollars of an incorrect reimbursement rate
from 1999 to 2002, due to other factors unrelated to the fraudulent conduct.
Under the terms of the settlement, SIUH agreed to implement major changes
at the hospital designed to ensure that the hospital complies with law.
Measures include appointing an independent monitor, a chief compliance
officer, tightening internal audits, mandating upper management oversight,
and rotating its outside auditors. SIUH also agrees to:
- Repay $76.5 million to the New York State Medicaid program;
- Maintain and/or improve its current level of health care services to the community;
- Bar Board members from engaging in business with the hospital during their service or for three years after completion of their service;
- Establish a Code of Conduct that governs employee, officer and board member conduct; and
- Bar any person
who is known to be, or has been, an alleged member or associate of an
organized crime group, syndicate or "family" to be become an
officer, board member, employee, or vendor of the hospital.
In light of the settlement agreement, the State has agreed to dismiss the Complaint.
Spitzer thanked the New York State Department of Health for its assistance and cooperation during the course of the investigation.
Staten Island University
Hospital, a 785-bed not-for-profit corporation, maintains its principal
place of business at 360 Seaview Avenue on Staten Island.
The investigation resulting in this recovery was conducted by Special
Assistant Attorneys General Glenn M. Jones, Deborah Nathan, David L. Calone,
and Paul J. Mahoney, under the supervision of Peter M. Bloch, First Assistant,
and William J. Comiskey, Deputy Attorney General-in-charge of the Medicaid
Fraud Control Unit.
STATEMENT FROM STATEN ISLAND UNIVERSITY HOSPITAL
Today the New York State Attorney General’s Office announced a settlement recovering unlawful Medicaid reimbursements to Staten Island University Hospital (SIUH). The settlement is based on actual damages conservatively estimated by the Attorney General’s Office, without the imposition of fines or penalties, and with significant weight given to the hospital's financial inability to pay more than what has been agreed to.
It causes SIUH’s Trustees and current Executives much pain to come before our community in these circumstances. We deeply regret and are embarrassed by the misconduct carried out by former executives of the Hospital that led to this settlement. We pledge to adhere to business and corporate governance reforms and practices that will be a national model for compliance and business ethics in the health care field.
We are proud of our many wonderful employees who were not participants in any misconduct and who work hard to serve the health care needs of our community. SIUH has not been served well by the handful of individuals whose conduct is responsible for us being in this position. But it has been served well by a far greater number of employees who attend to the needs of our patients and our community so diligently.
While significant, we do not now believe that the financial terms of this settlement will impair the future viability of SIUH and its ability to continue to provide the highest quality of care to our patients, who were innocent bystanders to the activities that led to these investigations.
We recognize that the hospital bears great responsibility for conduct that resulted in the receipt of substantial amounts in state reimbursement to which we were not entitled. We humbly pledge to work conscientiously to keep SIUH from ever again bringing such dishonor to the hospital.
Attachments: