‘You will be caught, you will be prosecuted’: AG rolls out crackdown on fraudulent Medicaid billings
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Attorney General Letita James threatened legal action against companies alleged to fraudulently bill Medicaid for fake services unless funds were returned. Photo via X/NY AG James
By Noah Powelson
Dozens of companies that offer transportation services for disabled New Yorkers have been taking advantage of New York’s Medicaid program, Attorney General Letita James claimed on Wednesday.
The Office of the attorney general announced 54 transportation companies across the state, five of which are located within New York City, have received cease and desist notices for illegally charging the state’s Medicaid program with fraudulent services. Eleven individuals have already been arrested for the schemes, lawsuits have been filed and millions of dollars in taxpayer money has been recovered. But James said Wednesday the legal actions are just the beginning.
“Companies that illegally profit by exploiting Medicaid patients steal taxpayer money and undermine the health care system that all New Yorkers rely on,” James said. “Today, I am putting the entire medical transportation industry on notice to stop these schemes that take advantage of vulnerable New Yorkers and steal critical funds intended to provide health care to those in need.”
The Medicaid program offers reimbursements to authorized businesses who transport Medicaid patients to and from their medical services. Licensed companies who meet the program’s requirements can bill Medicaid a base rate plus mileage and tolls for the trip. However, James said dozens of bad actors have been taking advantage of the system by overcharging medical rides or charging for rides that never took place.
The OAG launched an investigation into the transportation companies, including taxis, that are allegedly exploiting Medicaid through fake charges and services. Roughly $10 million in funds taken from faulty Medicaid reimbursements have been recovered, and a series of lawsuit settlements have recovered an additional $847,000.
The companies that were sent cease and desist letters earlier this week were also told to return any funds made through fraudulent Medicaid billing.
“We are also demanding repayment of stolen funding,” James said during a press conference on Wednesday. “And if they do not repay what they stole, we are prepared to take legal action.”
The companies’ schemes often involved billing Medicaid for fake trips, adding fake tolls to inflate costs or fraudulently extending the mileage of trips. The OAG also claimed these companies would use unlicensed drivers. In the most extreme fraudulent cases, companies paid Medicaid recipients kickbacks for requesting transportation services from the company.
“In some cases…they would approach individuals who had substance abuse disorders and would pay them cash. In some cases, they would even provide them drugs,” James said. “And then they would bill Medicaid for transportation services that, unfortunately, were illegal.”
James also said her team found that, among the areas where companies that received cease and desist orders reside, there were no neighborhoods or “transportation deserts” that would be affected by reduced transportation services. None of the companies targeted by the OAG have shut down, but James said there were “adequate services” should that come to pass.
The OAG said these fraudulent schemes deplete vital funds from the Medicaid program that could be used for services, as well as prey on vulnerable people with substance use disorders.
This crackdown is only the most recent action taken by the OAG against Medicaid fraudsters the past few years, and Queens has seen its fair share of bad actors as well.
In 2023, a Queens pharmacy’s owner and manager were arrested for stealing $2.9 million dollars from Amida Care, a Medicaid-funded managed care organization.
Juan Poveda, a 32-year-old from Nassau County, and 32-year-old Queens man Javier Burbano, who respectively owned and managed Santiago Pharmacy on Junction Boulevard in Flushing, were indicted for allegedly paying kickbacks to Medicaid recipients in exchange for filling HIV prescriptions, and submitted false claims for HIV drugs that they either obtained illegally or never actually purchased.
The duo were indicted by a Queens County grand jury on grand larceny in the first degree charges, health care fraud in the second degree charges, and for violating the New York Social Services Law for unlawfully paying kickbacks to Medicaid beneficiaries. They were also slapped with money laundering charges.
Court documents allege that Poveda and Burbano billed Amida for drugs, including the expensive HIV medication Biktarvy, that were either not legally obtained or that never actually existed. Poveda then allegedly attempted to hide the illegally obtained funds by funneling criminal proceeds from Santiago Pharmacy accounts to other bank accounts without any apparent business operations.
Attorney General James’ sent 54 companies cease and desist letters demanding the return of millions of dollars funds made from fraudulent billing. AP file photo/Mary Altaffer
Further back in 2019, the OAG arrested the owner and a driver of Purple Heart Transportation, a freight transportation company. The owner, Sean Ally, was found to have stolen over $1 million from the Medicaid program in a two-year timespan by billing fake trips that never took place.
Additionally, the investigation at the time found that $19 million dollars was paid to the company for services they never delivered. Purple Heart was found, like many of these other companies, to be paying clients a weekly kickback to use their Medicaid identification numbers for fraudulent bills.
The leaders of this scheme have been sentenced to prison and jail sentences and paid back $4.5 million to date, according to the OAG.
Paying kickbacks for medical services is already a felony in New York, but James said more needs to be done.
“We will be speaking with legislators, as well as the governor of the state of New York, in regards to some reforms as we approach the legislative session,” James said.
