Lawsuit alleges up to $18M in fraudulent Medicaid billings

06/12/2015 6:00 AM |
A lawsuit unsealed last month, filed under the False Claims Act, alleges Medicaid billing misdeeds. (Credit: Joseph Pinciaro)

A lawsuit unsealed last month, filed under the False Claims Act, alleges Medicaid billing misdeeds. (Credit: Joseph Pinciaro)

Jerry Bilinski said he remembers when things began getting uncomfortable for him at the Clubhouse of Suffolk.

At that point, in 2009, computers at the Roanoke Avenue nonprofit, which provides mental health services, were starting to replace handwritten billing statements and the technology was available to flag double billings, he recalled. He also remembers a memo that the program director sent to the entire staff at the organization, saying its focus to round out the year in December needed to be on providing the service that “generates the highest revenue.”

Mr. Bilinski included that memo in a lawsuit he filed in 2012 against his former employer, which was unsealed last month.

The nonprofit’s focus on generating Medicaid claims, the suit states, led him to believe it was prioritizing federal dollars over its clients’ needs.

“That’s when it got problematic for me,” Mr. Bilinski said Monday.


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“Right then and there, we’re talking about assessing people before we actually saw them. We’re putting pressure on clinicians and practitioners to bill for the highest service? That’s just not kosher.”

Mr. Bilinski had started working with the Clubhouse in 2003 and had been promoted three times by 2009, according to the lawsuit.

The complaint states that Mr. Bilinski began working in cooperation with the state attorney general’s office as a whistleblower in 2012, telling them that his employer was submitting fraudulent Medicaid claims.

After refusing to sign a nondisclosure agreement, the suit alleges, Mr. Bilinski was fired in late 2014 for insubordination. According to the suit, he would have been forced to violate the agreement if he continued to cooperate with the AG.

Though the suit was originally filed in 2012, a judge unsealed it in late May. According to Mr. Bilinski’s attorney, Jonathan Willens of Manhattan, the Clubhouse of Suffolk was unaware of the suit until then because it was under seal. The complaint is seeking lost pay and reimbursement for legal fees as well as repayment to New York State. As a whistleblower, Mr. Bilinski would be entitled to a certain percentage of any recovered funds obtained through fraud.

Mr. Bilinski, who has lived in the Riverhead area for 17 years, alleges that the organization billed up to $18 million in false Medicaid claims over the past six years. Those improper claims generated close to 60 percent of the nonprofit’s $5 million in annual revenue between 2007 and 2012, the suit claims.


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Medicaid fraud is a big business, particularly in New York State, and is the nation’s leading culprit in defrauding the health program that benefits the poor and disabled. According to federal statistics, in the 2014 fiscal year nearly 20 percent of all funds recovered through the nation’s 50 Medicaid Fraud Control Units — one is set up in each state — came from New York.

New York has 294 Medicaid fraud investigators — the most in the nation. In the last fiscal year, records show, those investigators recovered $378 million. That’s out of about $54 billion spent statewide on the “costly yet vital program,” according to the state comptroller’s office. Medicaid program costs are expected to climb another $8 billion in 2016.

Schemes against the nation’s health programs — both Medicaid and the costlier Medicare, which covers seniors — run the gamut and have been well documented in the national media. As far back as 2009, “60 Minutes” profiled several shadow companies that had empty storefronts in Florida yet somehow billed Medicare as much as $2 billion per year. In March, according to the New York Post, two health clinics in Brooklyn and the Bronx were targeted after their operators allegedly billed Medicaid $7 million while promising free shoes to homeless people — shoes that ended up in the company’s basement.

Last spring, The Economist reported, “Fraud mutates … Scammers over-bill for real services rather than charging for non-existing ones. That makes them harder to spot.”

According to the lawsuit filed by Mr. Bilinski, overbilling for services that were actually provided — as well as double billing and unnecessary billing — was commonplace at the Clubhouse of Suffolk. Not only that, it was apparently encouraged.

“Clubhouse of Suffolk instructed its case managers to complete billable ‘visits’ to clients even when there was no need for such visits,” the lawsuit states. “For example, Intensive Case Managers were told to visit clients up to four times in a single week to maximize their Medicaid billings” (italics from lawsuit).

Clubhouse of Suffolk, which is now known as the Association for Mental Health and Wellness, merged with two other nonprofits in 2014: the Mental Health Association in Suffolk and Suffolk County United Veterans. Requests for comment from the organization’s CEO, Michael Stoltz, received no response.

Mr. Willens said his client first filed suit against the Clubhouse of Suffolk on his own at the end of 2012. But he was unable to pursue it without the aid of an attorney, so Mr. Willens took the case in the spring of 2013, at which point the attorney general’s Medicaid fraud unit began investigating the nonprofit.

“We’re not alleging that anybody at the Clubhouse is lining its pockets, or buying yachts and mansions with Medicaid money,” Mr. Willens said. “This is a case where an organization is filing false claims in order to boost its annual revenues and taking advantage of government policies that are fairly liberal in reimbursing mental health services and a fairly friendly group of regulators.”

A spokesperson for Attorney General Eric Schneiderman would not comment on the status of any investigation, or on whether an investigation of Clubhouse of Suffolk or the Association for Mental Health and Wellness even took place.

Since its inception in 2010, the state’s Office of the Medicaid Inspector General — which works with the AG’s office and audits organizations in the state for Medicaid abuse — has not audited either organization. It regularly audits close to 30 organizations throughout the state per month.

The lawsuit points to previous audits completed by Suffolk County that indicate a lack of oversight within the organization. Five corrective actions were suggested by the county’s Department of Health in 2008, mostly relating to regular reviews of case files. It’s unclear what corrective measures, if any, were taken.

Mr. Bilinski said that after the AG’s office contacted Clubhouse of Suffolk, the organization required all employees to sign a non-disclosure agreement in late 2014.

“These provisions would make it impossible for an employee, including Mr. Bilinski, to act as whistleblower under the State False Claims Act without violating the agreement,” the suit states.

The day after Mr. Bilinski declined to sign the agreement, according to the complaint, he was fired for insubordination, in effect making him ineligible for unemployment.

According to Mr. Bilinski, the AG’s office later dropped its investigation in order to pursue bigger fraud cases. Mr. Willens said that occasionally, once whistleblowers take their cases to court, the state may bring charges of its own after more information is revealed.

“This is important for Suffolk County to focus on,” Mr. Willens said. “We are hopeful that we can bring the parties together and recognize that Medicaid fraud needs to be dealt with. That’s all Jerry wanted from the beginning.”

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