A.G. Schneiderman Secures $2.3 Million In Medicaid Fraud Settlements With Westchester Hospitals

Audit Uncovered Hospitals Violated Medicaid Rules By Improperly Overbilling Taxpayers For Physician-Administered Drugs

Schneiderman: Our Office Will Save Taxpayer Money By Eliminating Waste, Fraud And Abuse Wherever We Find It

WHITE PLAINS – Attorney General Eric T. Schneiderman today announced two Medicaid fraud settlements with Sound Shore Medical Center of Westchester and Mount Vernon Hospital, both members of the Sound Shore Health System, that total more than $2.3 million in recovered funds for taxpayers. The investigation by the Attorney General’s Medicaid Fraud Control Unit (MFCU) revealed that the hospitals improperly overbilled Medicaid for physician-administered drugs, a violation of state law. Sound Shore Medical Center of Westchester has agreed to repay the State $2,241,760.35, and Mount Vernon Hospital has already repaid the State $85,497.90.

“Since taking office, we have been determined to save taxpayer money by eliminating waste, fraud, and abuse wherever we find it,” said Attorney General Schneiderman. “Through the unlawful overbilling of Medicaid, these health care providers shortchanged New York State taxpayers to make a profit, and now they will be held accountable for their misconduct. In this time of fiscal crisis, we can't afford to waste a single penny on fraud.”

The investigation by the Attorney General’s Medicaid Fraud Control Unit revealed that the two hospitals improperly overbilled Medicaid for physician-administered drugs. In submitting their claims to the Medicaid program, hospitals are required to only bill the Medicaid program for the price they paid for the drugs. However, Sound Shore Medical Center and Mount Vernon Hospital billed Medicaid in excess of the cost of the drugs, and pocketed a profit of over $1 million. Under New York State law, to ensure that medical judgment is not improperly influenced by financial considerations, hospitals and doctors are not permitted to make a profit on the drugs they administer. Under the Attorney General’s settlements, the hospitals agreed to pay the state double what they had defrauded plus interest.

The investigation was part of a project undertaken by the Attorney General’s Office to investigate wide-spread failure of hospitals and physicians to properly submit claims for injectable drugs, commonly known as "J code" claims, in compliance with state pricing standards. To date, this review has resulted in the recovery of over $19.9 million from more than 145 providers, including hospitals, physician group practices and individual physicians throughout New York State, and the criminal prosecution of two providers as an off-shoot of these investigations.

The investigation was led by Special Assistant Attorney General Laura J. Meehan under the supervision of Jay S. Speers, Counsel to MFCU,  and assisted by Associate Special Auditor Investigator Karin Flynn. The Medicaid Fraud Control Unit is directed by Special Deputy Attorney General Monica Hickey-Martin.

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