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3 lessons from NY medical center accused of healthcare fraud

It began with a remodel project. A hospital in Northern New York decided to update its site. The project included the addition of new patient suites and upgrades, scheduled for completion in 2019. The cost of the project soared from $466 million to $545 million. Funds were not the only thing that allegedly got out of control during the renovation. Whistleblowers also came forward stating hospital officials were taking kickbacks to gain millions in fraudulent payments.

Hospital officials settled the allegations, paying a $15 million agreement to the government. The government agreed to the settlement instead of pursuing additional claims of fraud, pointing to a desire to “avoid the uncertainty and cost of litigation,” according to a recent piece by the Poughkeepsie Journal.

Other medical facilities in New York can learn from this case. Three key lessons include:

  • The government has incentive to crack down on allegations. The government estimates it loses over $2 billion annually as a result of False Claims Act violations and other kickback allegations. As such, prosecutors have incentive to pursue allegations and attempt to hold healthcare facilities responsible for any funds allegedly received through fraudulent means.
  • The process takes time. Unfortunately, the government rarely resolves these cases in a timely manner. This case began with a lawsuit filed in 2015. Although the facility settled the claim in 2018 it will likely continue to deal with fallout from the allegations.
  • Whistleblowers play a key role in building these cases. The government often relies on individuals within healthcare organizations to build these claims. $3.4 billion of the $3.7 billion in false claims cases brought in 2017 were built based on allegations made by whistleblowers.

Even with these obstacles, healthcare centers can have a promising future after navigating allegations of Stark Law and Anti-Kickback Statute violations. An attorney experienced in anti-kickback allegations can help build a defense and discuss your legal options.


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