Five defendants connected with SpecialCare Hospital Management Corporation will pay $8 million to Medicaid and Medicare programs that will settle claims that it illegally referred patients to unlicensed drug and alcohol treatment programs, said New York A | Shutterstock

ALBANY, N.Y. (Legal Newsline) - Five defendants connected with SpecialCare Hospital Management Corp. will pay $8 million to Medicaid and Medicare programs that will settle claims that it illegally referred patients to unlicensed drug and alcohol treatment programs, said New York Attorney General Eric Schneiderman on Monday.

The programs were at Columbia Memorial Hospital in Hudson and St. Joseph's Medical Center in Yonkers. The corporation allegedly received kickbacks for the referrals, Schneiderman said.

The lawsuit claims the corporation, which is a for-profit company, received the kickbacks by providing administrative services to the hospitals. Allegedly, patients were then referred to unlicensed and medically unnecessary inpatient drug and alcohol treatment services, and claims were then submitted to Medicaid for the services. The referrals allegedly took place between 2002 and 2006, Schneiderman said.

About $7.4 million will be returned to the Medicaid program in New York and about $597,000 will go to the federal Medicaid program.

“Drug and alcohol treatment programs are designed to help vulnerable people struggling with addiction. By exploiting their needs and the Medicaid program in order to maximize revenue, SpecialCare Hospital Management Corp., St. Joseph’s Medical Center, Benedictine Hospital and Columbia Memorial Hospital wasted Medicaid resources and illegally billed taxpayers for unlicensed and medically unnecessary treatment services,” Schneiderman said.

“This settlement holds those institutions accountable for their scheme, and will make providers think twice before defrauding the Medicaid system.

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