7 Hospitals in New York Accused of $50 Million Medicaid Fraud

ALBANY, N.Y. – Four hospitals in New York state paid kickbacks to get more patients into their drug treatment programs, which billed Medicaid for services that weren't standard or necessary and lacked state certification, lawsuits allege.

Another hospital paid people to search homeless shelters and other places for patients to enter a three-day stay in detox in exchange for cigarettes, beer, food, and other items, according to the lawsuit brought by state Attorney General Andrew Cuomo and U.S. Attorney Benton Campbell.

The lawsuits allege those five hospitals and two others fraudulently billed Medicaid for more than $50 million in more than 14,000 different claims.

Both attorneys' offices declined to say why they didn't pursue criminal charges. In both investigations, former hospital employees notified authorities of the issues, dating to 2002.

Five of the hospitals denied wrongdoing Monday, while the others couldn't be reached.

Cuomo said all seven hospitals claimed their detox services were part of a government treatment program but didn't have the required state license.

The lawsuits allege four of the hospitals engaged in a kickback scheme with Missouri-based SpecialCare Hospital Management Corp. to refer patients to the hospitals' detox units.

SpecialCare had an agreement to provide management and administrative services for the detox programs, but the lawsuit alleges it also illegally referred patients to the hospitals for a fee. Cuomo asserts that violates New York's anti-kickback laws.

"SpecialCare at times literally picked up strangers on the street, shuttled them to hospitals where they received treatment that was either inadequate or unnecessary, and then billed the state," Cuomo said in a statement.

The hospitals accused in the kickback scheme are Columbia Memorial Physicians Hospital Organization Inc., in Hudson; Long Beach Medical Center; New York Downtown Hospital; and St. Joseph's Medical Center in Yonkers.

The hospital accused of rounding up the homeless for detox is Queens' Parkway Hospital, which closed in November. The other defendants are the former Our Lady of Mercy in the Bronx and Benedictine Hospital in Kingston.

Spokesmen for St. Joseph's, Benedictine, Downtown Hospital, Columbia Memorial and Long Beach denied the allegations. Parkway officials couldn't be reached. SpecialCare didn't return a call for comment.

"Despite years of investigation, neither the office of the attorney general of the state of New York, nor the United States attorney's office, has articulated any viable claims," said Gary Schulz, an attorney for St. Joseph's.

The state settled for $4.5 million with Our Lady of Mercy, which denied all wrongdoing. Our Lady of Mercy is now run by Montefiore Medical Center and didn't return calls Monday.