The United States has reached a settlement in a civil fraud lawsuit against Community Options, Inc. and Community Options New York, Inc., as announced by Acting U.S. Attorney Matthew Podolsky for the Southern District of New York and Naomi Gruchacz, Special Agent in Charge of the New York Regional Office of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). The organizations have agreed to pay over $5 million to resolve allegations related to improper billing practices.
Community Options New York is a not-for-profit corporation operating facilities for adults with developmental or intellectual disabilities throughout New York State. It provides Day Habilitation services aimed at enhancing independence and daily skills for these individuals. Community Options, Inc., based in New Jersey, oversees these operations and manages billing submissions to Medicaid.
The lawsuit claimed that Community Options submitted claims for Day Habilitation services that did not meet necessary requirements and failed to return overpayments from Medicaid. Under the settlement approved by U.S. District Judge Valerie E. Caproni, Community Options will pay $2,148,540.37 to the United States and $2,868,085.74 to the State of New York.
Additionally, Community Options has entered into a Corporate Integrity Agreement with HHS-OIG requiring them to maintain compliance programs and engage an independent organization to review their Medicaid claims.
Acting U.S. Attorney Matthew Podolsky stated: “Community Options billed Medicaid for services that failed to meet program requirements and retained potential overpayments received from Medicaid when it had an obligation to report and return those funds." He emphasized ongoing efforts "to ensure that our most vulnerable New Yorkers receive the services they deserve."
Naomi Gruchacz added: “Individuals and entities that participate in the federal healthcare system are required to obey the laws meant to preserve the integrity of program funds.”
The complaint filed alleged that between January 1, 2017, and September 13, 2024, Community Options failed in maintaining policies consistent with OPWDD Requirements for documenting Day Habilitation services.
In connection with this case's resolution, both organizations admitted responsibility for certain actions outlined in the complaint.
Assistant U.S. Attorney David E. Farber is handling this case under the Office’s Civil Frauds Unit.