NY Nursing Home To Pay $2.2M To End Medicaid Fraud Suit

Law360, Washington (August 19, 2014, 2:43 PM ET) — Nursing home owner Ralex Services Inc. has agreed to pay $2.2 million to settle a whistleblower suit accusing it of bilking New York’s Medicaid program by overstating the level of care its residents needed, according to filings made in federal court Monday.
The settlement, which ends False Claims Act allegations against Ralex, the operator of New Rochelle, New York-based Glen Island Center for Nursing and Rehabilitation and its president and owner Leah Friedman, will be split between New York and the federal government, with the state taking the lion’s share — a little over $1.3 million, plus interest, cost and attorneys’ fees.
This figure could also be bolstered if Ralex succeeds in a pending suit against the state regarding Medicaid reimbursement rates, with a portion of any judgment from that suit to be added to the deal as a related “windfall” payment, according to the settlement agreement. Ralex has also agreed to enter into a corporate integrity agreement with the New York State Office of the Medicaid Inspector General to ensure it complies with state Medicaid rules in the future, if deemed necessary by the IG.
Counsel for relator Carolyn Hinestroza, Sara Wyn Kane of Valli Kane & Vagnini LLP, said Tuesday that the firm was pleased to see the issue resolved, after working with the government to help “pursue justice” in the case.
“We commend Ms. Hinestroza on her bravery and willingness to come forward,”  Kane said. “She observed what she believed to be fraud against the state and federal governments and took affirmative action to address it.”
Gabriel Nugent of Hiscock & Barclay LLP, representing the defendants, noted Tuesday that the settlement had resolved claims involving a former employee of Glen Island and said his clients were glad to conclude the case.
Regardless of the settlement, Glen Island was a “five-star” nursing home providing excellent service, Nugent said, with the alleged conduct bearing “no relation to the quality of resident care.”
According to a complaint-in-intervention and other court documents filed Monday, Ralex and Friedman had between at least April 2002 and October 2006 submitted bogus Patient Review Instrument, or PRI, data to New York’s Medicaid program falsely inflating the degree of care that Glen Island’s residents required, with PRI forms signed off on by Friedman and former administrator Eufemia Fe Salomon-Flores.
This PRI data is used as one of several components in determining the facility’s Medicaid reimbursement rate, and although bogus data was only submitted through 2006, claims continued to be paid out at inflated rates through March 2009, resulting in Glen Island receiving a higher rate than needed for the care of its residents across more than 62,000 claims, the complaint claimed.
Also, from 2007 onwards, the defendants attempted to cover up the scheme by adding false entries and forged signatures to residents’ medical records, including during a two-week “records tampering party” at the company’s corporate offices in February and March 2007, according to the suit.
The suit was first filed in February 2010 by Hinestroza, a former nurse at Glen Island, alleging she had discovered Salomon-Flores had been falsifying PRI data and forging staff signatures after refusing to sign off on PRI forms prepared by the administrator, and that she was terminated in retaliation for complaining about the issue to management and reporting the fraud to state officials. The case was unsealed in December, after both the state and federal governments partially intervened.
Hinestroza, as the relator in the case, will receive a 19 percent cut — about $250,000  — of the state’s share, in addition to her costs and attorneys’ fees to be paid by Ralex, according to settlement documents. It was not immediately clear what, if any, portion of the federal government’s share that she will receive.
Salomon-Flores — along with two nurses at the facility who aided in record tampering — has already pled guilty in state court to a grand larceny charge related to the fraud, in September 2011. Among other conditions, she agreed to pay $2.2 million in restitution to New York, which will be partially offset by the state portion of the settlement announced Monday, the deal says.
The federal government is represented by Loretta E. Lynch and Erin E. Argo of the U.S. Attorney’s Office for the Eastern District of New York.
New York is represented by Eric T. Schneiderman and Jill D. Brenner of the New York Attorney General’s Office.
Hinestroza is represented by Sara Wyn Kane of Valli Kane & Vagnini LLP.
The Ralex defendants are represented by Gabriel M. Nugent of Hiscock & Barclay LLP.
The case is U.S. and State of New York ex rel. Hinestroza v. Ralex Services Inc. et al., case number 1:10-cv-00822, in the U.S. District Court for the Eastern District of New York.
-Editing by Mark Lebetkin.
 
Original Article from: Law 360