Officials At Queens Treatment Center Charged With Conspiring To Steal $1 Million-plus In "soviet émigré" Fraud

Attorney General Spitzer today announced that Human Service Centers, Inc., a Queens-based alcohol treatment center, and three of its officials have been charged with conspiring to steal more than $1 million by systematically billing the Medicaid program for alcoholism outpatient services to hundreds of immigrants they lured to the center without first evaluating whether the individuals needed such treatment.

"Instead of providing legitimate health care, the defendants victimized a government assistance program, hundreds of recent immigrants, and taxpayers whose hard-earned dollars fund the program," said Spitzer. "This case is a warning to those who might be tempted to steal from the Medicaid program: You will be caught and you will be prosecuted."

Human Service Centers, Inc. (HSC), its owner, Daniel R. Panitz, and Yefim Melamed and Mikhail Novak were arraigned Monday in Queens County Supreme Court on a six-count indictment. If convicted, Panitz and Melamed face up to 25 years in prison, and Novak faces up to four years in prison. The corporation faces a possible fine equal to twice the amount of the illegal gain.

HSC is licensed by the New York State Office of Alcoholism and Substance Abuse Services to operate an outpatient alcoholism treatment center. Beginning in 1995, HSC began an outpatient alcoholism program called the "Russian Program," which catered to recent immigrants from Russia and other republics of the former Soviet Union. As a direct result of the program, HSC's annual Medicaid expenditures skyrocketed from approximately $200,000 in 1995 to more than $12 million in 2001. According to the indictment, during the defendants' conspiracy, HSC received approximately $25 million from Medicaid for its alcoholic clinic treatment services.

According to the indictment, between January 1996 and February 2002, the defendants defrauded Medicaid by falsifying recipients' records to make it appear that proper alcohol treatment services were provided to those participating in the program. It is alleged that HSC billed Medicaid without determining whether recipients needed alcohol treatment services; that recipients were admitted to the program without first being comprehensively evaluated by a qualified health professional; and that bona fide individual treatment plans were not drawn up by appropriate professionals or reviewed by a physician, all in violation of state requirements.

As part of the conspiracy, it is alleged that one or more of the defendants:

  • had HSC employees sign entries in the name of the program physician to make it appear that timely and appropriate reviews and approvals had been performed when they had not;
  • directed, in preparation for a financial audit, that the defendant Novak sign 27 boxes of charts in one week, and review and correct any deficiencies;
  • failed to maintain sufficient competent staff to provide alcohol treatment services for the "Russian Program";
  • paid counselors on a "per-patient-contact-basis" as an incentive to achieve maximum reimbursement from Medicaid irrespective of the patients' need for such services; and
  • submitted Medicaid reimbursement claims when, in fact, no legitimate clinical treatment services were provided, including billing Medicaid for an undercover agent, posing as a recipient, who received no alcoholism treatment but merely watched a Christmas entertainment program.

Prosecutors charge that the defendants enticed Russian immigrants to HSC by marketing their program in such Russian-language publications as Russkaya Reklama. Advertisements placed in these publications promised recipients free Metro cards and help in learning English and passing their citizenship examinations. The defendants also held weekly meetings with their Russian-speaking counselors, instructing them to give their patients the certifications for welfare and naturalization that they sought, and urging them to see patients as frequently as possible to increase Medicaid billings, regardless of whether repeated treatments were actually necessary.

Spitzer thanked the state Office of Alcoholism and Substance Abuse Services for their assistance and cooperation during the investigation.

Daniel Panitz, 58, lives at 51-13 Van Loon Street in Elmhurst Queens. He is the President and Chief Executive Officer for Human Service Centers, Inc., which is located at 87-08 Justice Avenue, also in Elmhurst.

Yefim Melamed, 57, lives at 175 Mackenzie Street in Brooklyn. He recruited and supervised the patients and counselors of the "Russian Program" and, from February 1996 to November 1998, was its director.

Mikhail Novak, 33, lives at 2885 Sawmill Road in Wantagh, New York. He was the director of HSC's "Russian Program" from November 1998 to February 2002, when it closed.

Panitz, Melamed, and HSC were each charged with one count of Conspiracy in the Fourth Degree, one count of Grand Larceny in the First Degree, and four counts of Offering a False Instrument for Filing in the First Degree. Novak was charged with one count of Conspiracy in the Fourth Degree.

The charges against the defendants are merely accusations, and the defendants are presumed innocent until and unless proven guilty.

Special Assistant Attorney General Cynthia Gordon, of the Medicaid Fraud Control Unit's New York City Regional Office, is prosecuting the case. Assisting in the investigation were former Special Assistant Attorney General Robert Dublirer, Special Investigator Arelis E. Restituyo and Supervising Special Auditor Investigator Helen Long.