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Post date: April 6 2001

Brooklyn Adult Care Provider Pleads Guilty In Nation's Largest Criminal Medicaid Fraud Case

Attorney General Spitzer announced today that the owner of a Brooklyn adult day care health facility has pled guilty to all charges against him in what is believed to be the nation's single largest criminal Medicaid fraud case.

In December 1999, the Attorney General's office charged Lawrence Friedman with stealing tens of millions of dollars from taxpayers by billing the Medicaid program for senior citizens' meals, social activities and unnecessary transportation - instead of approved medical care - at his Parkshore Adult Health Care Center at 9517 Avenue J and 945 East 108th Street.

Today, Friedman, 53, of Brooklyn, pled guilty to all 15 charges against him, including two counts of Grand Larceny in the First Degree, before Brooklyn State Supreme Court Justice Gustin Reichbach.

He will make restitution of $25 million to state taxpayers for his fraudulent billings. In addition, Parkshore will have $23.4 million withheld from its future reimbursements by the state Health Department as a result of a rate readjustment for the year 2000 and the first quarter of 2001.

Friedman will be sentenced on June 1, at which time he faces a minimum of one to three years in prison.

"We have achieved all of our objectives in this case," said Spitzer. "The defendant has admitted to all the charges against him, he will receive time in prison, and repay taxpayers tens of millions of dollars in ill-gotten gains."

"This case has already had a significant impact on the state's entire adult day care health industry," Spitzer continued. "Because of the problems uncovered, the state Health Department has made systemic changes in the way providers are paid, as well as reviewed past payments made to similar facilities, which have saved taxpayers millions of additional dollars."

Between July, 1996 and December, 1999, Friedman routinely submitted false records, claiming that those attending Parkshore were receiving medical care including physical and occupational therapy and blood pressure screenings.

Parkshore would receive $139 for each senior who was at the facility for five hour 'therapy' sessions. At its peak, Parkshore was operating three shifts daily and billing Medicaid for 'treating' close to 1,000 people per day at two locations.

Deputy Attorney General Jose Maldonado, the Director of the Medicaid Fraud Control Unit (MFCU) said, "Instead of providing approved medical services for those in need, the defendant brazenly billed taxpayers for activities like dancing, English classes, meals, and the services of a beauty parlor."

In addition, Friedman also improperly billed taxpayers for unnecessary ambulette transportation for seniors who were able to get to the facility on their own.

Parkshore served the Brighton Beach section of Brooklyn and its clients were almost entirely Russian immigrants. As a way to increase enrollment at Parkshore, Friedman gave $50 referral fees to seniors who induced their friends to go to the facility. Announcements about the $50 fees and other gifts were made in Russian and English every few hours over loudspeakers at the facility.

In trying to avoid detection by state Health Department inspectors, the Parkshore facility falsified blood pressure results, told recipients to 'dress down' so as not to appear too healthy, and in one instance, even took hundreds of seniors to see the movie "Titanic" in order to avoid being seen by inspectors.

"This prosecution should send a strong and clear message to all Medicaid providers: we will be aggressive and vigilant when it comes to ensuring that taxpayers' money is properly spent," said Spitzer.

Special Assistant Attorney General Richard S. Harrow, Director of the New York City Regional Office of Attorney General Spitzer's MFCU, prosecuted the case, with the assistance of Special Assistant Attorney General Michael P. Sofarelli, Deputy Director of the MFCU's Special Projects Unit and Assistant Attorneys General Michael Berlowitz and Arlene Osterer. They worked under the supervision of Maldonado and Criminal Division Chief Peter Pope.