Schneiderman settles suit for $18M

Keith Loria Jan. 19, 2011, 3:00am


NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced on Tuesday that he has reached an $18 million settlement with the state's largest residential services provider

Young Adult Institute Inc., organization officials Philip H. Levy and Karen Wegmann, as well as former CEO Joel M. Levy, were allegedly involved in inflating expenses to justify reimbursement of excess Medicaid dollars.

"Restoring New Yorkers' faith in their government and cracking down on those who try to defraud the taxpayers will be two of our top priorities in this office," Schneiderman said.

"Today's announcement should send a clear message that we will leave no stone unturned in the fight against Medicaid fraud, waste and abuse in New York State."

YAI annually submits requests to the New York State Office for People with Developmental Disabilities, seeking funding for losses incurred to operate its programs. The company allegedly misrepresented its expenses over the last decade, resulting in the company receiving more than $8 million in Medicaid funding than it should have.

Beginning in 1999, the company allegedly artificially inflated its expenses listed on its annual Consolidated Fiscal Reports to the state. Specifically, it allocated the expenses related to several employees to programs and sites at which those employees never worked, Schneiderman says.

YAI also allegedly falsely listed high-level administrative staff as clinic social workers and categorized fundraising expenses improperly.

The matter was brought to the attention of the attorney general's office by a whistleblower who filed a complaint that the company had improperly inflated its expense reports.

Under terms of the agreement, YAI is required to significantly reform its cost reporting practices. A total of $10.8 million will be returned to the New York State Medicaid program.

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