New York psychiatric services company pays $1 million to settle fraud charge

July 29, 2013

A New York company that provided psychiatry services to nursing home residents with dementia has settled a whistleblower Medicare fraud case for $1 million. The son of a company founder reportedly filed the original False Claims Act complaint to initiate the case.

The Department of Justice alleged Park Avenue Medical Associates billed for psychiatry services for patients whose dementia or cognitive disorders actually made them unable to benefit from psychotherapy. Authorities also charged the company with billing for services where there was no documentation. PAMA billed for nearly 91,000 exams that “were duplicative, failed to comply with Medicare rules and reflected a lack of coordination of care both among PAMA's own psychiatrist, psychologists and nurses, and between PAMA”s employees and staff at the facilities at which PAMA performed services,” according to the complaint.

Prosecutors said the organization gave incentives to employees to “perform unnecessary and duplicative services by compensating them based on how many services they provided and the level at which Medicare reimbursed for those services.” It continued that PAMA's compliance program was “inadequate” to detect and counter the illegal billings.

In a statement sent to McKnight's, Park Avenue Medical Associates said it "fully cooperated with the government during the course of this inquiry. It is pleased that this matter is now settled and that the uncertainties and cost of protracted litigation with the government have been avoided."

The settlement, which can be seen here, was approved Friday by U.S. District Court Judge Colleen McMahon. PAMA also entered into a corporate integrity agreement with the government, which guarantees additional oversight for a period of time.

The False Claims Act case became all the more interesting Thursday when it was reported by the New York Post that the whistleblower, Zachery Wolfson, is the son of the company's chief medical officer and founding partner, Mitchell Wolfson, M.D. The younger Wolfson stands to collect as much as $250,000 for filing the original complaint, according to the Post.

Source: Elizabeth Leis Newman, "Psychiatry company settles Medicare fraud allegations for $1 million," McKnights,


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