Federal Judge Affirms All Whistleblower Claims in Medicaid Fraud Lawsuit against New York City

In a qui tam lawsuit, filed by whistleblower attorneys from Levy Phillips & Konigsberg, LLP, alleging multimillion-dollar Medicaid fraud on the part of the City of New York, Federal Judge affirmed all claims and rejected the defendant NYC's attempts to dismiss them on technical grounds.

NEW YORK, New York, September 1, 2011 - In a 35-page opinion¹, Judge Jed S. Rakoff of New York's Southern District Court affirmed each and every claim originally made by LPK client-relator ("whistleblower"), Dr. Gabriel Feldman, in a potentially billion-dollar qui tam lawsuit alleging Medicaid fraud, filed against the City of New York under the False Claims Act, 31 U.S.C. § 3729 et seq.

Rejecting the City’s attempts to defeat LPK's original qui tam claims by labeling them as “border[ing] on the frivolous,” Judge Rakoff found the False Claims Act allegations valid, noting that “the allegations in the Government’s Amended Complaint describe the very type of wrongdoing that the FCA was intended to prevent,” and permitted the Medicaid fraud case to go forward.

The False Claims Act lawsuit was originally filed under seal by LPK. The U.S. Attorney’s Office for the Southern District of New York intervened in the case, adopting the whistleblower’s qui tam claims and filing its First Amended Complaint² on January 11, 2011.

The allegations in the qui tam lawsuit relate to New York City’s operation and administration of the state and federally funded Personal Care Services Program (“PCS”). PCS is a Medicaid program designed to provide at-home services to individuals who require assistance performing activities of daily living, such as eating, bathing, dressing, toileting, light housework, meal preparation, transportation, grocery shopping and money management.

New York State law provides that these services may be provided to Medicaid recipients at various levels ranging from a few hours a week to around the clock, 24-hour care, known as “sleep-in” or “split-shift” service. Sleep-in service costs approximately $75,000 per year per patient, while split-shift care costs approximately $150,000 per year per patient. The whistleblower claims in the qui tam lawsuit pertain to the City’s illegal authorization of services to thousands of patients receiving 24-hour care.

New York State law mandates that certain regulations must be followed before PCS is authorized and re-authorized for a Medicaid recipient. The crux of the False Claims Act lawsuit is that the City failed to comply with these regulations by recklessly rubber-stamping approvals for thousands of patients who did not legally qualify for the program.

The qui tam complaint alleges compensatory and statutory damages, including fines and penalties, which could amount to the recovery of hundreds of millions and, perhaps, billions of dollars.

Alan Konigsberg and Theresa Vitello, the False Claims Act attorneys at Levy Phillips & Konigsberg, LLP, represent the whistleblower in this qui tam lawsuit.

For more information about this or other whistleblower lawsuits, please contact Levy Phillips & Konigsberg, LLP, at 212-605-6200 or 1-800-988-8005, 24 hours a day, 7 days a week.

¹ See attached a scanned copy of the Judge's opinion;
² See attached a scanned copy of the U.S. Government’s First Amended Complaint.

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