Earlier this month, an owner of Brooklyn-based Happy Family Social Adult Day Care Center, Inc., Family Social Adult Day Care Center, Inc. and Responsible Care Staffing, Inc., a home health care fiscal intermediary operating under the Consumer Directed Personal Assistance Program (CDPAP), pleaded guilty to defrauding Medicaid of approximately $65 million for social adult day care and home health services that were not provided.[1]
The defendant pleaded guilty to conspiracy to commit health care fraud and is scheduled to be sentenced next March; he is the tenth individual to plead guilty in connection with the same scheme. A co-owner who led the conspiracy was sentenced last month to 76 months’ imprisonment for her role in orchestrating the fraud. She was also ordered to pay more than $56 million in restitution and to forfeit $5 million in fraudulent proceeds.[2]
As described by prosecutors, in exchange for kickbacks and bribes, “a web of marketers” referred Medicaid recipients to these businesses. The owners and marketers, in turn, paid kickbacks and bribes to the beneficiaries to induce them to enroll for services that were billed to Medicaid, but were never actually provided as represented. Defendants “used multiple business entities to launder the fraud proceeds and generate the cash used to pay kickbacks and bribes to the marketers and the Medicaid recipients.”
The sentence and guilty plea were reported by the National Fraud Enforcement Division (NFED), which launched in April of this year. In making the announcements, the head of NFED, Assistant Attorney General Colin McDonald, declared that “[t]he Fraud Division will relentlessly hold accountable individuals who exploit Medicaid and take advantage of services meant to support our seniors.” Referring to the hefty sentence, he continued, “This sentence should put all Medicaid fraudsters on notice — if you steal from Medicaid, we will uncover your conduct, protect the beneficiaries you harm, and ensure you are brought to justice.”
If you have any questions about this article or how the activities of DOJ’s new National Fraud Enforcement Division could affect your organization, you may contact the author at Geoffrey.Kaiser@rivkin.com or (516) 357-3161.
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[1] https://www.justice.gov/opa/pr/social-adult-day-care-owner-pleads-guilty-65m-medicaid-fraud
[2] https://www.justice.gov/opa/pr/brooklyn-adult-daycare-owner-sentenced-prison-leadership-role-64m-medicaid-fraud-scheme
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