First-ever Larceny Conviction Of Medicaid Managed Care Co.

State Attorney General Spitzer announced today that his Medicaid Fraud Control Unit has obtained a first-of-its-kind conviction of a New York City managed care company and its owner for illegally billing Medicaid for patients that were intentionally deleted from doctors’ rosters. Neither the patients nor the doctors were notified of the changes.

New York Health Plan, Inc. and its President and CEO Jay Fabrikant have entered into a plea bargain which provides for repayment of $375,000 to Medicaid.

"This landmark conviction should serve as a warning to other managed care organizations that my office is looking out for the interests of New York consumers," said Spitzer. "Patients literally put their lives in the hands of their health providers, and we will ensure that these companies act responsibly."

Today in New York State Supreme Court, Fabrikant pled guilty to one count of "Offering a False Instrument for Filing in the First Degree," a Class E felony, and New York Health Plan pled guilty to one count of "Grand Larceny in the Third Degree," a Class D felony.

Fabrikant admitted in court that New York Health Plan filed a false claim for a patient who had been deleted from her physician’s roster. He has been sentenced to three years conditional discharge and is required to complete 250 hours of community service within that time, or face stiffer penalties.

In October of 1998, Health Plan and Fabrikant were indicted and charged with one count of "Grand Larceny in the Second Degree," nine counts of "Offering a False Instrument for Filing in the First Degree," one count of "Scheme to Defraud in the First Degree," and one count of "Tampering with Physical Evidence in the First Degree."

The charges stemmed from the removal of some 6,700 patients’ names from primary care physicians’ rosters. The indictment charged that Fabrikant orchestrated the scheme to avoid paying the doctors for these patients after learning that his managed care contract with the State was being terminated.

The indictment also charged that Fabrikant concealed from the Grand Jury copies of the rosters which had been sent to physicians in an effort to suppress incriminating evidence. Health Plan paid its providers a fixed monthly fee for every patient on their rosters.

All told, investigators found that more than $300,000 was pocketed by Fabrikant, 79 participating doctors were affected, and thousands of patients were left without a primary care physician.

NYC’s Medicaid Managed Care Office and the State Department of Health assisted with the investigation. The case was handled by Assistant Attorney General Bonnie Stein of Attorney General Spitzer’s Medicaid Fraud Bureau.