Healthcare News & Insights

Unlicensed detox program proves costly: Hospital on the hook for fraud

When people are battling addiction, it’s crucial they receive high quality care throughout their recovery. Because of this, hospitals with drug treatment programs are often held to high standards. But one New York hospital allowed fraud to interfere with its mission – and it’ll cough up big bucks as a result.

As the result of a whistleblower lawsuit filed under the False Claims Act, New York Downtown Hospital must pay $13.4 million in restitution costs to the Medicare and Medicaid programs. The hospital agreed to pay the fine as part of a settlement for the case.

The lawsuit accused the hospital of some pretty significant crimes. According to a press release released by the New York Attorney General’s Office, the hospital conspired with an out-of-state healthcare vendor, Special Care Hospital Management Corp, in a pay-for-patients kickback scheme.

Under their illegal agreement, New York Downtown Hospital would pay the vendor $38,500 in exchange for Medicaid patient referrals for its drug and alcohol detoxification program.

Even worse: The detoxification program wasn’t properly licensed by the state, as is required to collect federal funds.

The lawsuit further alleged that, although the hospital failed to obtain certification, it continued to promote its drug treatment program and accept patients in complete violation of New York law.

Once admitted to the hospital, patients battling addictions were given treatments that weren’t medically necessary and failed to meet the proper standards of care.

“Drug and alcohol treatment programs are designed to help people struggling with addiction. By exploiting this need in order to maximize revenue, New York Downtown Hospital wasted Medicaid resources and illegally billed taxpayers for unlicensed and medically unnecessary treatment services,” said New York Attorney General Eric T. Schneiderman in the release.  “This settlement holds New York Downtown Hospital accountable for this scheme, and will make providers think twice before defrauding the Medicaid system.”

Just more proof that crime doesn’t pay.

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