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City of NY agrees to settle whistleblower suit for $70 million

Recently, the city of New York agreed to pay $70 million to settle allegations that it submitted false claims to the Medicaid program. Documents from a federal court in Manhattan detail that the city admitted that its Human Resources Administration had reauthorized 24-hour personal care services for some Medicaid recipients without obtaining independent medical reviews or authorization required by medical professionals.

Sources said the suit which gave rise to the settlement was initially brought under the False Claims Act. The False Claims Act allows whistleblowers to obtain a reward when a false claim is paid by the federal government and then recovered.

The city's personal-care services program is reportedly designed to provide basic services for patients, including cleaning, shopping and medical aid for Medicaid recipients. The idea behind the program is to provide services for poor and sick New Yorkers. An applicant of the program, however, may not receive services unless their eligibility has first been determined.

Prosecutors claim that the city had already paid tens of millions of dollars in its handling of the personal-care services program. According to the city's lawyer, the settlement was in the interest of the city's financial health. The city's attorney also said the human resources department had provided the personal-care services in good faith and the government's lawsuit was based upon "technical record-keeping deficiencies."

U.S. Attorney Preet Bharara, the attorney in charge of the case, the case was not about mere paperwork, and any statements to the contrary, contradicted the statements the city submitted to the court in the course of litigation.

Source: Thomson Reuters News & Insight, "NYC to pay $70 mln to settle charges of Medicaid mishandling," Noeleen Walder, November 1, 2011.

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