A whistleblower lawsuit has accused the Visiting Nurse Service of New York (VNSNY) of defrauding Medicaid and Medicare and receiving millions of dollars for care ordered by doctors, which the patients never received

Visiting Nurse Service of New York Faces Medicaid and Medicare Fraud Lawsuit

October 10, 2016

A whistleblower lawsuit has accused the Visiting Nurse Service of New York (VNSNY) of defrauding Medicaid and Medicare and receiving millions of dollars for care ordered by doctors, which the patients never received. According to the allegations, VNSNY systematically billed for the full number of nursing and rehabilitation visits ordered by doctors, but patients received only a fraction of them.

The lawsuit was initiated by whistleblower Edward Lacey, VNSNY's former VP of Operations Improvement and Integration, who had been with the organization for 16 years. Investigations into fraudulent conduct are, however, nothing new for the healthcare provider Visiting Nurse Service of New York. In 2014, VNSNY paid the government $35 million to settle a lawsuit alleging that it had enrolled over 1,700 ineligible individuals into Medicaid plans. 

Under the False Claims Act, whistleblowers such as Edward Lacey who have information about fraud against the government can file a lawsuit on the government's behalf and are entitled to a portion of any received damages and civil penalties. Whistleblower rewards range from 15 to 30% of the total recovery.  

Visiting Nurses Evolve from Charity to Allegations of Massive Fraud

Originally a charitable entity, the Visiting Nurses Service of New York is now a billion-dollar business. The text of the lawsuit is categorical in pointing out the gravity of the allegations:  “Beyond this massive financial fraud on the government, the ultimate victims here are the tens of thousands of elderly, disabled and impoverished New York residents who because of VNSNY’s misconduct have not been getting the critical home health care services they require.” 

While the agency's spokespeople have dismissed the lawsuit as the work of a disgruntled former employee, the lawsuit cites several examples of patients who were shortchanged for care, and whose health suffered as a result. In one case, a patient who was set to receive 27 rehabilitation visits and 38 nursing visits, received only five nursing visits. Meanwhile, VNSNY was reimbursed in the amount of $3,537 for the full care plan.

According to the whistle blower lawsuit, VNSNY patients typically received one fifth or less of the care prescribed by physicians. The whistleblower claims that he tried to get senior management to correct the misconduct, but his attempts were unsuccessful, which led him to resign and initiate legal action.

When the New York Times reported on the lawsuit, Richard Rothstein, VNSNY's vice president of enterprise communications, commented, “If The New York Times considers this self-serving and baseless whistleblower complaint to be news, this would be a clear departure from the standards of journalistic integrity to which it holds itself and its reporters, and nothing more than an intentional effort to smear VNSNY’s name and reputation.” 

Upper Management Service Capacity Concerns Ignored

The lawsuit also describes corporate meetings where senior managers voiced concerns about the agency's lack of capacity to service an excessive number of patients. According to the allegations, Mary Ann Christopher, VNSNY's Chief Executive at the time, dismissed those concerns and ordered that all referrals be taken, even if the agency was understaffed to provide the care patients required.

The agency is also being accused of routinely double-billing the government when patients were eligible for both Medicare and Medicaid.

Originally filed in the Southern District of New York in 2014, the False Claims suit had hitherto been under seal, but it was unsealed last week. The U.S. government has not as yet joined the lawsuit as a plaintiff, but it reserves the right to do so in the future.

If the allegations are substantiated, whistleblower Edward Lacey could receive millions of dollars in rewards as provided by the qui tam provision of the False Claims Act.