Whistleblowers Receive Millions for Uncovering Kickback Scheme between Hospital and Detox Services Management Company

New York Downtown Hospital has agreed to pay $13.1 million to resolve qui tam allegations that it paid illegal kickbacks for patient referrals from a for-profit detoxification services management company. According to the government’s complaint-in-intervention, the hospital paid fees to SpecialCare Hospital Management Corp., under purported administrative services agreements. However, the agreements cloaked arrangements for the company to illegally refer Medicaid patients, in violation of federal and state anti-kickback laws.

The government also alleged that the hospital made false Medicare and Medicaid claims for inpatient drug and alcohol detoxification treatment, when its detox programs lacked the required state license. The allegations concerned the hospital’s operation of a detox program, called New Vision, from July 1998 to February 2006.

Two qui tam relators originally brought the schemes to the governments’ attention in 2002, when they filed a multi-defendant action against several hospitals. The federal government and New York state intervened in the case in 2009. Claims against the other defendants remain pending.

More information for whistleblowers is located at the Nolan Auerbach website.