Children's Medical Equipment Company To Repay Taxpayers For Providing Used Equipment While Billing For New Equipment

Attorney General Spitzer announced today that Pediatric Services of America, Inc. (PSA), a national provider of medical equipment to critically ill children based in Norcross, Georgia, agreed to pay the New York State Medicaid Program more than $239,000 for selling used durable medical equipment to Medicaid recipients while claiming that the equipment was new.

The Attorney General's investigation revealed that the Elmsford, New York regional office of PSA sold used durable medical equipment, including life sustaining medical devices such as pulse oximeters, suction pumps, feeding pumps and compressors, to critically ill children who were Medicaid recipients. Specifically, the investigation found that between January 1998 to December 2003, PSA claimed that it sold new medical equipment to these recipients, when in fact, the equipment had been previously used by other PSA patients.

Under New York's Medicaid rules, equipment that is sold to Medicaid patients must be new in order for Medicaid to pay for that equipment. MFCU's investigation revealed that in some situations Medicaid paid PSA twice for the same "new" equipment. MFCU also determined that in other instances PSA did not have required records to verify that the equipment furnished was new.

PSA agreed to pay $142,017 to the Medicaid program for the used items it unlawfully sold to Medicaid recipients. It further agreed to pay an additional $97,730 in interest and penalties.

This repayment will add to the more than $200 million recovered by MFCU to date in federal fiscal year (ffy) 2005. Recoveries in ffy 2005 are more than double last year's figure of $79 million, which set a national record for annual Medicaid recoveries.

Special Assistant Attorney General Thom O'Hanlon of the Medicaid Fraud Control Unit's Pearl River Regional Office headed the investigation. Supervising Investigator Paul Greenspan, Special Investigator Timothy Connolly, Principal Special Auditor Investigator Ann Winslow and Supervising Special Auditor Investigator Lora Pomponio assisted in the investigation.

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