Substance Abuse Treatment Provider in New York Settles Federal Fraud Lawsuit for $6 Million

            The U.S. Attorney’s Office for the Southern District of New York recently announced a $6 million settlement with a substance abuse treatment center for a civil healthcare fraud lawsuit[i] for alleged kickbacks and falsified medical records.

        The provider, Addiction Care Interventions Chemical Dependency Treatment Centers (“ACI”) and its owner are required to repay the Government $6 million. Additionally, the owner has entered into a Voluntary Exclusion Agreement with the HHS-OIG in which he will be excluded from participation in Medicaid and other federal healthcare programs for 15 years.

The suit alleged three main forms of illegal conduct:

  • The company drivers targeted homeless individuals and offered them inducements, such as food, cash, and alcohol to persuade the prospective patients to enroll in ACI.  ACI paid the drivers based on the volume of patients they recruited.  
  • ACI also paid a sham, part time “translator” whose true job was to refer patients to ACI. The translator only translated a few times, despite being paid more than $75,000.  
  • ACI also falsified certain medical forms to support claims for reimbursement. The false forms allegedly contained photocopies of a physician’s signature to support the claims.

            As part of the settlement agreement, ACI and its owner acknowledged that the company’s management was made aware of the allegations concerning its drivers and their inducements, yet it took no action.

            Cases such as these illustrate the importance of hiring a healthcare attorney before providing services. A healthcare compliance/regulatory attorney may advise a healthcare provider on the legalities of certain types of marketing and compensation arrangements and their level of risk.  However, healthcare providers are often unaware that certain marketing strategies or performance incentives for employees may be illegal or make them vulnerable to regulatory actions or whistleblower claims.

            Unfortunately, waiting too long to contact a healthcare attorney may have severe consequences: civil lawsuits and overpayments–with damages in the millions of dollars, criminal penalties, and exclusion from the Medicare or Medicaid program, which can have collateral consequences. For example, exclusion from the Medicare program may result in sanctions against the provider’s state license[ii] and/or the owners’ professional license,[iii] if they hold one.  

            If you, or healthcare providers you know have questions about its marketing or other business arrangements, please contact us. The Health Law Offices of Anthony C. Vitale has experience in advising clients on a variety regulatory matters.

[i] Acting Manhattan U.S. Attorney Announces Settlement With Substance Abuse Treatment Center And Its Owner For Enrolling Patients Through Kickbacks And Using Falsified Patient Admissions Forms | USAO-SDNY | Department of Justice

[ii] Fla. Stat. § 408.815(1)(e)

[iii] See e.g., Fla. Stat. § 456.0635

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Daniel Ferrante