NY AG accuses hospitals of kickbacks, fraud

ALBANY, N.Y. (AP) — Seven New York state hospitals are facing lawsuits accusing them, in some cases, of rounding up the homeless or paying kickbacks to get more inpatient detox patients into their drug treatment beds, and lacking certification for detox services.

In one of the cases — Parkway Hospital in Queens, which closed in November — is accused of paying people to search homeless shelters and other places for patients to enter a three-day stay in detox in exchange for cigarettes, beer, food, and other items, according to a suit filed by Attorney General Andrew Cuomo. His office hasn't charged the now-defunct hospital with kickbacks.

In civil lawsuits filed by Cuomo and U.S. Eastern District Attorney Benton Campbell, the hospitals are accused of fraudulently billing Medicaid for more than $50 million in more than 14,000 different claims.Both attorneys' offices declined to say why they didn't pursue criminal charges. In both investigations, former hospital employees notified federal and state authorities of the issues, dating back to 2002.

The hospitals named in the suit are Columbia Memorial Physicians Hospital Organization Inc., in Hudson; Long Beach Medical Center; New York Downtown Hospital; St. Joseph's Medical Center in Yonkers; the former Our Lady of Mercy in The Bronx; Benedictine Hospital in Kingston, and Parkway.

The suits also name Missouri-based SpecialCare Hospital Management Corp., as a defendant. The company faced a similar suit in Illinois, when a former hospital employee accused the company and an Illinois hospital of admitting patients into detox who did not meet criteria because of the lucrative Medicaid reimbursements. That case was dismissed, but more detailed claims have since been filed.

Spokesmen for St. Joseph's, Benedictine, Downtown Hospital, Columbia Memorial and Long Beach denied the allegations. Parkway closed and officials couldn't be reached. Our Lady of Mercy is now run by Montefiore Medical Center and didn't return calls. SpecialCare didn't return a call for comment.

"Despite years of investigation, neither the Office of the Attorney General of the state of New York, nor the United State's Attorney's Office has articulated any viable claims," said Gary Schulz, an attorney representing St. Joseph's.

Cuomo said all the hospitals operated detox services claiming they were part of a government treatment program, but they didn't have the required state license for the treatment. The suits also accuse the hospitals of billing Medicaid for inpatient detox services that weren't medically necessary, or didn't meet standards.

Separately, the suits accuse four of the hospitals of engaging in a kickback scheme with SpecialCare to illegally refer patients to the hospitals' detox units.

The suit claims the company entered into agreements with Columbia Memorial; Long Beach Medical Center; New York Downtown Hospital, and St. Joseph's Medical Center in Yonkers. The agreements were supposed to have SpecialCare provide management and administrative services for the detox program, but the lawsuit accuses the company and hospitals of illegally referring patients to the hospitals for a fee.

Cuomo asserts that violates New York's anti-kickback laws.

"SpecialCare at times literally picked up strangers on the street, shuttled them to hospitals where they received treatment that was either inadequate or unnecessary, and then billed the state," Cuomo said in a written statement.

The state settled for $4.5 million with Our Lady of Mercy, which denied all wrongdoing.

The lawsuits were first reported by The New York Post.