When A State And City Government Steal From The US, Crime Pays
By Barry Zalma - August 13, 2009
The whistleblower or Qui Tam lawsuit allows a private citizen to sue, on behalf of the Government, people involved in defrauding the government. If successful the whistleblower can receive a large percentage of the recovery obtained by the government. It is one of the most effective tools to reduce fraud because the Government does not have the staff to fully prosecute white collar crimes in civil courts.
One such whistleblower, Hedy M. Cirrincione, a speech therapist who worked in Watertown, New York in the 1990's, filed such a suit and will receive $10 million in a record-breaking settlement of a Medicaid fraud whistleblower suit against the state of New York and New York City according to a report submitted by the U S Justice Department in July 2009. Cirrincione triggered a federal investigation into claims that Jefferson County had improperly collected Medicaid reimbursement for services she provided to poor children in several school districts.
Cirrincione filed whistleblower suits in U.S. District Court in 1998 and 1999 against Jefferson County and the state Department of Education.
The suits were sealed for a decade, becoming public Tuesday only after Magistrate David Peebles approved a $540 million settlement that requires New York State to pay $440 million to the United States and New York City to pay $100 million. The United States agreed to turn over $10 million to Cirrincione and $210,950 to her lawyers, Menz Bonner & Komar LLP of New York City.
According to the US Attorney:
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The settlement resolves allegations that for the period 1990 to 2001, the state of New York knowingly failed to provide proper guidance to the districts and counties outlining the requirements for a service to be covered by the Medicaid program, failed to monitor the districts and counties for compliance as required by the program and passed on claims to the federal government for services it knew were not covered or properly documented, all to make the United States pay a larger share of New York’s Medicaid costs.
The settlement sets a record for a recovery for the Medicaid Program by the Justice Department. It is the seventh largest whistleblower settlement, overall, according to Cirrincione's lawyers. New York did not admit to any wrongdoing in settling the case.
The State and City Profit >From the Settlement – Half-Off Restitution
New York’s governor, David Patterson said, in a statement:
I am pleased to report that we have a resolution on this matter, which has been pending for more than 10 years. While it is unfortunate that State and City funds have to be repaid to the federal government, we believe that this settlement requires payment of approximately $1 billion less than we could potentially have had to pay if the matter had gone to litigation. In addition, the settlement ensures that federal Medicaid funding remains available to school districts so they can provide children with disabilities the services they need.
That state of New York provides services under the SSHS program, which are reimbursed by the federal Medicaid program. They are to be provided to children with disabilities according to each child’s individualized education program or individualized family service plan, established as required by the federal Individuals with Disabilities Education Act. The services are provided by school districts and claims for reimbursement are submitted to and paid by the State, which in turn submits them to CMS for partial reimbursement. The state of New York, not an individual criminal, cheated the US Government from up to $1 billion and received a settlement where it only needed to reimburse the US $440 million and the City of New York will pay $100 million.
I can only wonder why the US Attorney accepted a settlement equal to what the governor believed was only 10% of the exposure faced and why the government is not putting a hold on monies paid to the state under the Medicaid program.
Cirrincione, 54, could not be reached by the press for comment. Her attorney would not identify her or provide information about his client because he said she wanted to keep her privacy. Cirrincione purchased property in North Carolina in 2001 and sold her property in Watertown in 2008. Cirrincione's whistleblower suit prompted the U.S. Health and Human Services Department to audit a decade worth of Medicaid claims submitted by school districts and counties to New York State for speech therapy, occupational therapy and transportation provided to students. New York reimbursed the localities and then obtained partial reimbursement from the federal government. The audit recommended Medicaid disallow $1.07 billion in claims for reimbursement.
It seems everyone enjoys stealing from the US Government especially, even when caught, the perpetrator is only required to pay back a small part of that stolen. Steal $1.07 billion and settle for $440 million. That means that the state profited from its fraud by $630 million. Fraud pays and Ms. Cirrincione should be given a medal to go with her $10 million prize for helping the US Government. She should also avoid traveling to New York state.
The settlement with the state and New York City did not resolve claims in a separate suit Cirrincione filed against Jefferson County and Larry Tingley, its retired director of community services, in state Supreme Court.
Readers may write to Barry Zalma at zalma@zalma.com. Zalma's monthly Zalma's Insurance Fraud Letter or ZIFL is at www.zalma.com | 
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