A.G. Schneiderman Announces Indictment Of Three-Quarter House Director Charged With Defrauding Medicaid Through The Use Of A Kickback Scheme

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
June 13, 2017

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A.G. SCHNEIDERMAN ANNOUNCES INDICTMENT OF THREE-QUARTER HOUSE DIRECTOR CHARGED WITH DEFRAUDING MEDICAID THROUGH THE USE OF A KICKBACK SCHEME

Schneiderman: Medicaid Cannot Serve As A Bank Account For Criminals Who Have No Regard For The Well-Being Of Their Fellow New Yorkers

NEW YORK—Attorney General Eric T. Schneiderman announced the indictment, arrest and arraignment of Robert H. Corrado, 56, Kristina Corrado, 32, of Nesconset, New York, and Interline Employee Assistance Program, Inc. for engaging in a systematic kickback scheme and violating patients’ rights. In addition to the arrest, the Attorney General’s Medicaid Fraud Control Unit (“MFCU”) filed several civil causes of action against Robert Corrado and Kristina Corrado, Interline, and others seeking to recover monies improperly obtained as a result of their criminal conduct.

“We allege that the defendants engaged in a systematic, ongoing scheme to exploit those struggling with homelessness and substance abuse in order to line their own pockets,” said Attorney General Schneiderman. “Medicaid cannot serve as a bank account for criminals who have no regard for the well-being of their fellow New Yorkers. My office will continue to fight for the integrity of the Medicaid program to ensure that our tax dollars are not wasted – and instead put towards helping our most vulnerable citizens, as intended.”

In an indictment unsealed yesterday in Queens County Supreme Court and papers filed in Queens County Supreme Court, Civil Term, prosecutors allege the Corrados and Interline engaged in an illegal kickback scheme whereby Robert Corrado, Executive Director of Interline, an outpatient substance abuse treatment program, and owner of several three-quarter houses located in Queens and Brooklyn, provided housing at below market rent to homeless clients on the condition that the clients attend treatment at Interline and nowhere else. Robert Corrado and Interline, in turn, received payment from Medicaid for substance abuse treatment claims predicated on this kickback arrangement. 

Interline’s three-quarter homes, prosecutors allege, are located throughout Queens and in Brooklyn and are called “Care House” and are managed by Kristina Corrado, Robert Corrado’s daughter, from within Interline’s offices where she monitored the attendance of Care House residents at Interline’s outpatient program.  Attendance and treatment progress of Care House residents were regularly shared by Interline staff with staff at the Care Houses, and residents who were not compliant with mandatory treatment requirements set forth by Interline were evicted from the Care Houses.  The overlap in staff and operations between Interline’s outpatient treatment program and its Care Houses created a de facto residential treatment program, that neither entity is licensed to operate. Under New York Mental Hygiene law, it is a crime to operate an unlicensed residential treatment program. The requirement that Care House residents must receive treatment at Interline deprived them of their fundamental freedom of choice in medical care in violation of numerous State laws, including the Patient’s Bill of Rights.  

Prosecutors allege that Robert Corrado and Kristina Corrado acted in concert with Interline to perpetuate this kickback scheme.  As a result, it is alleged that Robert Corrado and Interline knowingly and intentionally submitted, and caused to be submitted, at least $2,327,524 in fraudulent claims for reimbursement to Medicaid.  These claims, prosecutors allege, were fraudulent because they resulted from illegal kickbacks, deprived patients of their freedom of choice and were the result of the operation of an unlicensed residential treatment program.

Robert Corrado and Interline were charged with Grand Larceny in the First Degree, a class B felony.  Robert Corrado and Interline along with Kristina Corrado were further charged with violating the Social Services Law prohibiting the payment of kickbacks related to the provision of services under the State’s Medicaid program, a class E felony.  Interline was also charged with three counts of Offering a False Instrument for Filing in the First Degree, a class E felony, and violating the State’s Mental Hygiene Law prohibiting the operation of a residential treatment program without the proper operating certificate, a class A misdemeanor. In addition to the indictment unsealed yesterday, the Attorney General filed a civil complaint against Interline, Robert Corrado, Kristina Corrado and Kim Corrado, who is Robert Corrado’s wife. The complaint, which asserts violations of New York’s False Claims Act, Section 145-b of New York’s Social Services Law and other causes of action, seeks to recover millions of dollars of Medicaid money obtained by these defendants as a result of their fraudulent conduct. While Kim Corrado has not been criminally charged, she is listed on state filings as the sole owner of Interline, and the civil complaint alleges that she, like the criminal defendants, reaped substantial financial benefits from the fraud.

Last week, the Attorney General’s Medicaid Fraud Control Unit also executed a search warrant at Interline’s offices located at 148-39 Hillside Avenue in Queens.

Throughout this investigation, the Attorney General’s office has worked closely with the various city and state agencies. In particular, the Attorney General would like to thank the New York City Human Resources Administration and the New York State Office of Alcoholism and Substance Abuse Services for their cooperation, partnership and valuable assistance throughout the investigation. In addition, the Attorney General thanks the Office of the Medicaid Inspector General for its assistance. 

The investigation was led by Investigator Shavaun Clawson, with the support of Supervising Investigator Victor Maldonado; all under the supervision of Deputy Chief Investigator Kenneth Morgan. Financial audit support was provided by Audit Investigator Nicholas Thottam with the assistance of MFCU Principal Special Auditor Investigator Emmanuel Archer and MFCU Chief Auditor Thomasina Smith.  

The criminal case is being prosecuted by Special Assistant Attorneys General David Arias and Konrad Payne with the assistance of NYC Regional Director Christopher M. Shaw. Thomas O’Hanlon is MFCU’s Chief of Criminal Investigations–Downstate. The civil case is being handled by Special Assistant Attorney Konrad Payne with the assistance of MFCU Civil Chief Carolyn Ellis. MFCU is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. 

The charges filed in this case are merely accusations. The defendants are presumed innocent unless and until proven guilty in a court of law.        

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