In late October the U.S. Attorney’s Office in the Southern District of New York announced the settlement of a False Claims Act case against Westchester Medical Center (“WMC”) for $7 million, for submitting false reimbursement claims to Medicaid from August 2001 through June 2010 involving outpatient behavioral health services.  The settlement is to be paid in equal amounts of $3.5 million to the United States and to New York State.

The government’s complaint alleged that WMC billed for outpatient mental health services without having the core documentation required for billing under Medicaid.  The government’s complaint further alleged that WMC’s outpatient department had “virtually no compliance program prior to mid-2010 to ensure that the services took place or that they were provided in accordance with applicable regulations,” and that management was aware of the problems and took steps to avoid dealing with the problems.  In addition to alleging that WMC had presented false claims, the government’s complaint alleged that under the Patient Protection and Affordable Care Act (“PPACA”), WMC had failed to report and return overpayments of Medicaid funds as required within 60 days after identifying the overpayment.

As previously highlighted in this blog, the SDNY has been  requiring  defendants in False Claims Act settlements to admit to a core set of facts.  In the WMC settlement, WMC admitted that required documentation, including patient progress notes, treatment plans and treatment reviews, were often missing or incomplete; that the behavioral health center outpatient clinic lacked a dedicated compliance program; and that WMC had permitted a nurse practitioner who was not properly credentialed to furnish psychiatric services.

The Westchester Medical Center settlement highlights once again the need for medical providers to have a strong compliance program and to aggressively address any compliance problems and any overpayments from Medicare and Medicaid.  Any hope for WMC to mitigate its record-keeping problems was likely lost due to its failure to monitor compliance and address problems when they were raised.  In addition, this case shows that the government will be vigilant in prosecuting FCA claims under PPACA’s requirement that overpayments be reported and returned within 60 days of identification.