Justice Department sues New York City, CSC over Medicaid claims

The federal government alleges the city of New York and Computer Sciences Corp. orchestrated fraudulent billing schemes that generated millions of dollars in false Medicaid claims paid to the city.

The U.S. Justice Department filed a lawsuit in U.S. District Court in Manhattan accusing the city and CSC of violations under the False Claims Act, Preet Bharara, U.S. attorney for the Southern District of New York, announced Monday.

According to the complaint, the city and company used computer programs to get around the requirement that Medicaid should be billed only after private health coverage is exhausted. They also allegedly used a “defaulting program” to falsify diagnosis codes submitted to Medicaid.

New York City and CSC officials deny the allegations.

“The city has cooperated fully with the U.S. attorney's investigation, but we strongly disagree with the allegations, which we believe involve technical billing issues, not fraud,” the city's law department said in a statement.

“The Health Department acted appropriately and all services billed were authorized and provided.”

CSC spokesman Richard Adamonis said in a statement the company is confident it did not submit any claims to Medicaid for which New York was not entitled to payment. “We believe there is no factual or legal basis to support virtually all the allegations of which we have been made aware during the course of the inquiry, and that the complaint is without merit,” Adamonis said. “CSC will vigorously defend itself.”

The alleged fraud involved the state's early intervention program services to children under the age of 3 with developmental delays or medical conditions likely to cause delays. For children receiving the services in New York City, the city is responsible for processing and paying claims submitted by service providers and then seeking coverage from private insurers or Medicaid or billing New York State for its 49% share of the costs not covered by private insurance or Medicaid.

The city contracted with Computer Sciences to process service-provider claims and then seek coverage from private insurers, Medicaid or the state. In hopes of minimizing its own costs, the city then offered the company financial incentives to exceed certain targets for Medicaid payments and imposed penalties when the company didn't meet the city's goals for Medicaid payments, according to the U.S. attorney's office.

The government alleges the city and Computer Sciences then implemented fraudulent schemes using computer programs that automatically altered billing data to meet those goals.

“As alleged, CSC and the City created computer programs that systematically, and fraudulently, altered billing data in order to get paid by Medicaid as quickly as possible and as much as possible,” Bharara said in a statement. “Billing frauds like those alleged undermine the integrity of public healthcare programs like Medicaid.”

A whistle-blower, Vincent Forcier, triggered the federal investigation with a lawsuit filed under the False Claims Act. In successful cases, whistle-blowers are entitled to a percentage of whatever the government is able to recover.

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