Last week, the United States Attorney’s Office for the Eastern District of New York announced a $13.4 million settlement it reached with New York Downtown Hospital surrounding False Claims Act allegations brought against the hospital. The two cases that initiated the investigation, United States and New York State ex rel. Gelfand v. Special Care Hospital Management Corporation, et al. and United States and New York State ex rel. Montaperto v. New Parkway Hospital, et al., were filed by two whistleblowers under the qui tam provisions of the federal and state False Claims Acts.
According to the allegations, NY Downtown, together with Special Care Hospital Management Corporation, a Missouri-based company, ran an inpatient drug and alcohol detoxification program under the name of New Vision. The companies allegedly operated New Vision without the necessary license from the NY State Office of Alcoholism and Substance Abuse Services. Without the required license, NY Downtown would not be allowed to bill Medicare and Medicaid for any treatment provided by the program. Additionally, the complaints accused NY Downtown of paying Special Care for Medicaid and Medicare patient referrals, thereby violating anti-kickback statutes. Finally, NY Downtown was accused of providing services to Medicare and Medicaid patients that were either medically unnecessary or did not meet professionally recognized standards of care.
The federal government will receive $5.84 million from the settlement and the New York State government will receive $7.56 million. The two whistleblowers, Mathew Gelfand, M.D. and Enrico Montaperto, will receive an 18% share of the settlement as their award for blowing the whistle on NY Downtown.
In addition to NY Downtown, there are nine other defendants in these cases: Special Care Hospital Management Corporation, Robert McNutt—Special Care’s CEO, Long Beach Medical Center, Parkway Hospital and its successor New Parkway Hospital, Benedictine Hospital, Columbia Memorial Hospital, Our Lady of Mercy Medical Center, and St. Joseph’s Medical Center. On July 15, 2008, the US, New York State and the relators settled the claims against Our Lady of Mercy for $4.5 million. The claims against the remaining defendants are still being litigated.