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Financial Fraud Law

New York City Settles Whistleblower Suit Over Medicaid Claims for Psychological Services for Special Education Students

 The federal government and the City of New York have settled the case of Ohlmeyer ex rel. United States of America v. City of New York, a whistleblower action brought pursuant to the qui tam provisions of the federal False Claims Act.

In its civil complaint, the federal government alleged that the City of New York Department of Education (DOE) submitted false claims to Medicaid for psychological counseling services for special education students in New York City public schools. The settlement calls for the city to pay $1,375,000 to the United States.

Of the settlement amount, 15 percent, or $206,250, will be paid to Dana Ohlmeyer, who initiated the case under the qui tam, or whistleblower provisions, of the FCA. The city will also pay FCA attorney’s fees of $40,000.

“When Medicaid shells out scarce dollars for services that are not provided, both the students in need of psychological support and the public fisc are harmed,” stated U.S. Attorney Loretta Lynch. “We will vigorously pursue entities, including local governmental agencies, that seek reimbursement of federal funds to which they are not entitled.”

As described in the complaint, Medicaid pays the DOE a flat fee of $223 for each student to whom the DOE provides at least two psychological counseling sessions in a calendar month. Half of that money comes from the federal government. The DOE is not entitled to any payment if an individual student receives fewer than two counseling sessions in a month. The United States alleged that, between 2001 and 2004, the DOE knowingly billed Medicaid for counseling services to individual students, even though it provided fewer than two counseling sessions per month to those students. In one case, the DOE requested 15 months of payments from Medicaid for psychological counseling to a student during the 2001-02 and 2002-03 school years, prosecutors asserted. The federal government asserted, however, that according to the DOE’s own service records, the student received fewer than two counseling sessions in 12 of those months.

 Contact the author at smeyerow@optonline.net

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