A.G. Schneiderman Announces $6 Million Medicaid Settlement With Brooklyn Home Care Agency

Settlement Resolves Claims Of Improper Reporting Of Home Health Aide Hours And Administrative Costs

NEW YORK – Attorney General Eric T. Schneiderman today announced a $6 million dollar settlement with Empire State Home Care Services, Inc. (Empire), a home care agency operating out of Brooklyn, NY. The settlement resolves claims that Empire improperly reported its home health aide hours as well as administrative and general expenses on cost reports filed between 2002 and 2005. These cost reports were used to set the reimbursement rates that Empire received from the state for the years 2004 through 2007 and resulted in over $3 million in reimbursements to which Empire was not entitled.

The audit revealed that Empire reported the salaries and benefits of administrative personnel under direct care cost centers, rather than administrative and general cost centers. By improperly placing these costs in direct care cost centers, Empire received inflated Medicaid reimbursement rates during the audit period. The settlement stipulates that Empire will pay $6 million to the state, including penalties on top of the just over $3 million that was improperly reimbursed.

“Many New Yorkers count on Medicaid for important health services, and I will continue to safeguard Medicaid funds to ensure they are being used for their intended purpose,” said Attorney General Schneiderman. “When Medicaid reimbursements are inflated by providers, it causes funds to be diverted from those most in need.”

The audit also found that Empire improperly allocated certain home office costs to the direct care cost centers, thereby further inflating their reimbursement rate.

The underreporting of home health aide hours as alleged in this case increased the hourly rate at which the state would reimburse the agency for such services. Further, improperly reporting administrative costs under the category of nursing services also inflates the size of a home health agency’s reimbursement.

The matter was handled by Jay Speers, Counsel to the New York MFCU, Assistant Attorney General Laura Meehan, and Milan Shah, Associate Special Auditor Investigator. Stacey Millis is the Chief Auditor of the Medicaid Fraud Control Unit’s Civil Enforcement Unit. The New York Medicaid Fraud Control Unit is headed by Acting Director Amy Held and Assistant Deputy Attorney General Paul Mahoney. The Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

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