August 26, 2016 — In a joint release issued today, New York Attorney General Eric T. Schneiderman and United States Attorney Preet Bharara announced a first-of-its-kind settlement with Mount Sinai Health System to resolve allegations it violated the False Claims Act (FCA) by retaining Medicaid overpayments for more than 60 days after identifying that overpayments were made. This is the first settlement involving an Affordable Care Act provision that created FCA liability for health care providers that identify overpayments and do not return them within 60 days. Mount Sinai agreed to resolve the allegations for $2.95 million of which $1.7 million will go the state of New York and the federal government will receive $1.2 million.
Knowing retention of an overpayment from government for more than 60 days is known as a “reverse false claim” and is a violation of both federal and state false claims acts. The entities involved include Mount Sinai Beth Israel, Mount Sinai St. Luke’s, Mount Sinai Roosevelt and the Hospitals’’ former partnership group, Continuum Health Partners, Inc.
“Repaying Medicaid for false claims is not only vital to the integrity of the program, but it is also the law,” said Attorney General Schneiderman. “We will not allow hospitals to drain important resources from the system, and will continue to ensure that the program is properly reimbursed for the funds that it is owed.”
The investigation was initiated after a whistleblower filed a lawsuit and the government intervened. The settlements resolve allegations in complaints filed by the State and the United States in federal court, alleging Mount Sinai became aware that it wrongfully billed Medicaid for $844,000 worth of claims in 2009 and 2010, and that Mount Sinai knowingly avoided fully reimbursing Medicaid for those payments until 2013.
U.S. Attorney Preet Bharara said the case arose after Continuum had been alerted by Robert Kane, a technical director for operations, to a software glitch that caused the erroneous billing of 444 claims to Medicaid in 2009 and 2010. Court papers show that rather than Continuum making repayments, Continuum fired Kane on Feb. 8, 2011, four days after he had pushed senior management to reveal the severity of the problem. Mr. Kane will receive a $354,000 share of the settlement proceeds after full payment by Mount Sinai.
“The process for identifying the refunds was complicated and time-consuming, but Continuum continued with the process in good faith until all the refunds were finally identified and repaid, well before it became aware of this lawsuit,” said Mount Sinai.
As part of the settlements, Mount Sinai admitted that, beginning in 2009, a software compatibility issue, a coding error because the health care provider to submit the improper claims. In September 2010 the New York Office of the State Comptroller brought to Continuum’s attention a small number of these claims, and the Defendants admitted that in late 2010 they were made aware of the coding error. Defendants also admitted that in late 2010 and January 2011, they gathered and analyzed billing data in order to discover the possible affected claims. Continuum reimbursed Medicaid in February 2011 for only five of the 444 improper claims. Beginning in April 2011 and concluding in March 2013, the remaining claims were reimbursed.
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