Attorney General Recovers $3.4 Million In Settlements From Buffalo-area Mental Health Providers For Medicaid Overbillings

Attorney General Spitzer today announced that three Buffalo-area mental health providers have agreed to civil settlements, totaling nearly $3.4 million, for services that the State funded but the providers could not document as having delivered.

As a result of the settlement agreements, the State will receive $1.7 million from the Niagara Falls Memorial Medical Center (NFMMC); $1 million from the Martha Beeman Foundation, Inc., of Niagara Falls; and $196,996 from Lakeshore Behavioral Health, Inc., of Buffalo.

As part of its settlement, NFMMC agreed to provide an additional $500,000 in uncompensated care and services to indigent patients over the next two years.

"The taxpayer-funded Medicaid program was designed to assist citizens in need," said Attorney General Spitzer. "The recovery of these monies by my Medicaid Fraud Control Unit (MFCU), and the safeguards provided by these agreements, will go a long way toward ensuring that those needs are being properly met."

The settlements announced today were based on audits conducted by the MFCU. In reviewing the billing records of NFMMC's Martha Beeman Mental Health Clinic for outpatient services, the audit revealed that between June 1995 and September 1998, NFMMC received Medicaid reimbursement for services that were not performed in compliance with regulations governing hospitals operating within the Medicaid program. Specifically, the audit found that when siblings visited the clinic, photocopies of the same sets of notes were entered into each child's medical records. By failing to maintain proper records, NFMMC could not substantiate that the visits actually occurred or that services were rendered.

In addition to repaying $1.7 million to the Medicaid program, and providing $500,000 in services to uninsured individuals over the next two years, Niagara Falls Memorial Medical Center also agreed to:

  • Institute a compliance protocol for the next two years that includes, in part, the retention of an independent review organization for its outpatient mental health clinics;
  • Conduct three hours of training each year to managers and employees involved in the submission of outpatient mental health service claims to the Medicaid program; and
  • Cooperate fully with the MFCU in matters relating to the operation of its mental health clinics.

The NFMMC audit arose from an earlier audit of the Martha Beeman Foundation, a private nonprofit foundation which, in addition to funding numerous charitable grants, operated a mental health clinic that treated children and adolescents and billed Medicaid and other insurers for its services. NFMMC acquired the Beeman Foundation's mental health clinic in June 1995.

The MFCU's audit of the Martha Beeman Foundation covered the period January 1992 to May 1995, and revealed a widespread pattern of billing improprieties. For example, the Foundation billed separately for siblings who were seen together in a single therapy session; billed both Medicaid and the Niagara Falls School system for the same in-school therapy sessions; and received funds through the State's Comprehensive Outpatient Program Services in excess of the services actually rendered.

The MFCU's third audit focused on Lakeshore Behavioral Health, Inc., a nonprofit corporation providing mental health services at clinics located throughout Western New York. In reviewing the Medicaid billing records for Lakeshore's Alcoholism Clinic, Continuing Day Treatment, and General Mental Health Clinic, the audit revealed that between January 1996 and December 1999, Lakeshore received reimbursement for services though no documentation existed to substantiate that such services had been rendered.

Spitzer noted that, including the most recent settlements, civil actions by his MFCU over the last three months have resulted in the recovery to taxpayers of more than $8.3 million in Medicaid overpayments - including more than $2 million from Erie County Medical Center (ECMC) for outpatient alcoholism services that the State funded, but ECMC failed to properly document as having provided to Medicaid recipients.

The investigations resulting in these repayments of Medicaid funds were conducted by Special Assistant Attorney General Michael T. Kelly, Director of the Buffalo Regional Office of Attorney General Spitzer's Medicaid Fraud Control Unit. All cases are handled under the direct supervision of Deputy Attorney General Jos? Maldonado.