Medicaid Fraud Unit Created In Wake Of 1970's Nursing Home Scandal Commemorates 25th Anniversary At Brooklyn Marriott

Attorney General Spitzer today announced that his Medicaid Fraud Control Unit (MFCU) will commemorate its 25th Anniversary on Wednesday, April 12, 2000, at a reunion reception for several hundred past and present staff members at the Brooklyn Marriott (333 Adams Street) in downtown Brooklyn from 6 – 9 p.m.

The Attorney General’s MFCU is the oldest and largest statewide operation in the nation dedicated exclusively to the investigation and prosecution of health care crime. The 300-member MFCU is responsible for monitoring the more than $25 billion annually spent on Medicaid in New York State – more than 15% of the nation’s total.

Attorney General Spitzer said, "Twenty-five years ago, New Yorkers were shocked by revelations of widespread financial fraud, patient abuse, and official corruption plaguing the State’s nursing home industry. In response, New York became the first state in the nation to establish an office – the Medicaid Fraud Control Unit – to thoroughly investigate those engaged in health care fraud and abuse in order to protect both patients and taxpayers."

Spitzer continued, "Little did anyone suspect back then that the investigative office being established would not only successfully accomplish its original mandate by cleaning up the State’s nursing home industry and restoring fiscal integrity to the State’s health delivery system, but would also shape the way all of America would investigate and prosecute health care fraud from the 1970s into the next century."

Deputy Attorney General José Maldonado, the Director of Spitzer’s Medicaid Fraud Control Unit, said, "Unquestionably, much of the credit for the success of the MFCU goes to the tireless dedication and unwavering commitment of its highly skilled staff, who, for a quarter of a century, have endeavored to ensure quality, fraud-free health care for all New Yorkers. Indeed, not content to rest on its laurels, the Unit, in just the last six months alone, has reached a record $84 million civil settlement with Staten Island University Hospital for Medicaid overbillings, and has arrested a Brooklyn adult day health care center’s owner for committing what is believed to be the single largest Medicaid fraud -- $62 million -- in U.S. history."

The Unit - originally known as the Office of the New York State Special Prosecutor for Nursing Homes, Health, and Social Services - was created in January 1975 following the revelation of widespread and shocking abuses plaguing the State’s nursing home industry. The exposure of these scandals in late 1974 by the Temporary State Commission on Living Costs and the Economy, and by the media – including several intensive investigative projects by the New York Times, Village Voice and WNEW-TV – drew national attention to the fact that millions of Medicaid dollars earmarked for the care of elderly and indigent patients were instead lining the pockets of greedy and politically influential nursing home owners and operators.

In October 1977, Congress, citing the success of the New York Unit, created the federally funded Medicaid Fraud Control Unit Program to encourage other states to "help establish Medicaid Fraud Control Units patterned after the successful unit in New York." Since the inception of this pioneering program, the 48 Medicaid fraud control units presently operating around the country have obtained over 9,000 convictions, recovered hundreds of millions of dollars in restitution, and have prevented the loss of many more billions of dollars in Medicaid overpayments.

In 1982, the U.S. House of Representatives’ Select Committee on Aging, in an extensive study of the various states’ Medicaid fraud control efforts, found that the New York Unit was "the best in the nation" and had "provided the nation with a model of state enforcement effort." The Committee also found that New York’s MFCU had "changed New York from the least effective to the most effective state in terms of Medicaid (fraud) detection and prosecution."

In 1995, the MFCU was incorporated more directly into the Attorney General’s Office and placed within its Criminal Division. As such, the MFCU continued to successfully prosecute some of the largest and most sophisticated frauds ever committed against the Medicaid program.

The MFCU has seven regional offices, which are located in Albany, Buffalo, Long Island, New York City, Pearl River, Rochester, and Syracuse. In addition, the MFCU has two specialized units operating out of New York City – the Civil Unit and the Appeals Unit – as well as the statewide Special Projects Division headquartered in Pearl River. Federal legislation currently provides 75% funding for the Unit’s activities.

Since its inception, the MFCU has prosecuted nearly 3,000 defendants for Medicaid fraud and related crimes and has achieved over a 91% percent conviction rate. The Office has been responsible for the recovery of more than $326 million in overpayments, fines, and restitution.

Joining Attorney General Spitzer and Deputy Attorney General Maldonado at the reunion will be Mr. Maldonado’s predecessors – Brooklyn District Attorney Charles J. Hynes, New York City Department of Investigation Commissioner Edward J. Kuriansky, and New York State Department of Health Acting Associate Commissioner Stephen M. Spahr.

Other alumni expected to attend the reception include:

  • Honorable Richard D. Carruthers, Acting New York State Supreme Court Justice;
  • Honorable Robert R. Meehan, Rockland County Court Judge;
  • Honorable Clifford Leinberger, United States Administrative Law Judge;
  • Howard Wilson, former Commissioner, New York City Department of Investigation;
  • Alain M. Bourgeois, First Deputy Commissioner, New York City Department of Investigation;
  • Peter Bloch, Deputy Commissioner, New York City Department of Investigation;
  • Barry Friedman, Inspector General for the New York City Health and Hospitals Corporation;
  • Edward Rothman, Inspector General for the New York City Department of Sanitation;
  • Peter Jenik, Deputy Commissioner, New York City Human Resources Administration;
  • Philip H. Stern, Senior Managing Director, Decision Strategies/Fairfax International L.L.C.;
  • William H. Larkin, CFE, Director of Forensic Accounting, Decision Strategies/Fairfax International L.L.C;
  • Michael C. Jaeger, CPA, CFE, Managing Director, Kroll Associates; and
  • Michael G. Kessler, founder of Michael G. Kessler and Associates, Ltd.


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