Case Document 1 Filed 01/21/16 Page 1 of 52

us. couaT
NB. OF- NY.
FILED
UNITED STATES DISTRICT COURT JAN 2 1 20m
NORTHERN DISTRICT OF NEW YORK
LAWRENCE K. BAEBMAN, CLERK

 

UNITED STATES OF AMERICA, ex rel. TIMOTHY ALBANY
CLEARY, and the STATE OF NEW YORK, ex rel.
TIMOTHY CLEARY,
COMPLAINT
Plaintiffs,
?against- 7 La
EN

HEALTH QUEST SYSTEMS, PUTNAM
HOSPITAL VASSAR BROTHERS
HOSPITAL dfba? VASSAR BROTHERS MEDICAL
BAF CONSULTANTS, FACS, LLC
dfbfa ISHKILL AMBULATORY SUPPORT
SERVICES, and HEALTH QUEST HOME
CARE, INC.
Defendants.



Plaintiffs the United States, the State of New York and Relator Timothy Cleary, by and
through their undersigned counsel, hereby allege for their Complaint against Health Quest
Systems, Inc., Putnam Hospital Center, Vassar Brothers Hospital dfbr'a Vassar Brothers Medical
Center, BAF Consultants, LLC, FACS, LLC dsz?a Fishkill Ambulatory Support Services, and
Health Quest Home Care, Inc. (?Defendants?), as follows:

INTRODUCTION

1. Relator Timothy Cleary, brings this gal tam action under the False Claims Act
3] 3729, et? seq, and the New York False Claims Act N.Y. Fin.
Law 187, at saga, on behalf of himself, the United States of America, and the State of New
York, to recover money damages and civil penalties arising from false statements and false

claims knowingly submitted or knowingly caused to be submitted to the federal government by

defendant Health Quest Systems, Inc. (?Health Quest?), and its subsidiary entities, Putnam

 

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Hospital Center and Vassar Brothers Hospital dfbi?a Vassar Brothers Medical Center
and BAF Consultants, LLC FACS, LLC dfbfa Fishkill Ambulatory
Support Services and Health Quest Home Care.

2. As explained in detail below, Health Quest, PHC and VBMC violated the federal
Stark Law and the federal and state anti-kickback laws by entering into improper payment
arrangements with various physicians and medical practices, such as contracts not supported by
fair market value, payments to physicians pursuant to long-term or expired contracts, and by
paying physicians pursuant to contracts despite the failure of those physicians to provide the
services required by the contract. In their cost reports and claims for reimbursement under
Medicare and Medicaid, Health Quest, PHC and VBMC falsely certified that they were in
compliance with applicable state and federal laws and regulations and otherwise eligible for
reimbursement for designated health services provided by PHC and VBMC to patients referred
to the hospitals by various physicians and physician practices.

3. or example, Health Quest and its subsidiary PHC falsely and fraudulently
submitted claims to and received payments from the United States and the State of New York for
medical services provided to patients who were referred to PHC by Somers Orthopedic Surgery
Sports Medicine, PLLC (?Somers Orthopedic?), and doctors employed by Somers Orthopedic,
at a time when Somers Orthopedic?s members were receiving illegal kickbacks from, and
engaged in an illegal ?nancial relationship with, PHC, through BAF Consultants, LLC. As one
of major sources of referrals, Somers Orthopedic?s principals and employees referred
thousands of patients to PHC during the relevant period. In particular, PHC paid hundreds of
thousands of dollars to BAF Consultants from 2000 through 2014 to induce Somers Orthopedic?s

doctors to refer patients to PHC for designated health services. Although the purported purpose

 

 

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of those payments was to compensate BAP Consultants for administrative and clinical
responsibilities, in fact, no such services were provided to PHC.

4. Similarly, Health Quest and its subsidiary VBMC falsely and fraudulently
submitted claims to and received payments from the United States and the State of New York
medical services provided to patients who were referred to VBMC by medical practices af?liated
with FACS, including, the former Mid-Hudson Medical Group (now a part of Mount Kisco
Medical Group), and Hudson Valley Surgeons, RC, and doctors employed by those
practices, at a time when members were receiving illegal kickbacks from, and engaged
in an illegal ?nancial relationship with, VBMC. As some of major sources of referrals,
the principals and employees of the medical practices af?liated with FACS referred thousands of
patients to VBMC during the relevant period. In particular, VBMC paid hundreds of thousands
of dollars to FACS from 2001 through 2014 to induce the doctors af?liated with FACS to refer
patients to VBMC for designated health services. Although the purported purpose of those
payments was to compensate FACS for administrative and consulting services, in fact, no such
services were provided to VBMC, and fees were paid long a?er the contracts expired in 2006.

5. In addition, beginning in July 2014, Health Quest and VBMC billed Medicare for
cardiac testing services under the enhanced provider base billing rates, despite knowing that it
did not qualify for such enhanced rates, and have failed to repay the overpayment to Medicare
despite knowing that such overpayment existed since September 2014.

6. Further, from April 2011 through at least August 2014, Health Quest and its
subsidiary Health Quest Home Care billed Medicare for home care despite knowing that it did

not have adequate documentation of a face-to-face encounter with a certifying physician, and

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repaid only approximately $3.5 million to Medicare in December 2015 despite having placed a
$9 million reserve on its books for this overpayment in December 2014.

7. Finally, between May 2013 and December 2015, Health Quest and VBMC have
improperly billed Medicaid for clinic services under APG rate code I432 despite knowing that
VBMC was not eligible to bill under that code.

8. Under the FCA and the NYFCA, Defendants are liable for treble damages and
penalties for each false claim that they submitted to Medicare or Medicaid as set forth above.

PARTIES

9. Plaintiff United States of America, acting through the Department of Health and
Human Services and the Centers for Medicare and Medicaid Services is
responsible for administering the Health Insurance Program for the Aged and Disabled
established by Title of the Social Security Act (Act), 42 U.S.C. 1395 et seq.
(?Medicare?), and Grants to States for Medical Assistance Programs pursuant to Title XIX of the
Act, 42 U.S.C. 1396 at seq. (?Medicaid?).

10. Plaintiff New York State, acting through the Department of Health (DOH), is
responsible for administering the New York State Medicaid program.

1 . Relator Timothy Cleary (?Relator?), is a citizen of the State of New York and
brings this action on behalf of the United States of America pursuant to the private action
provisions ofthe False Claims Act, 3] U.S.C. 3730(b). Relator has been a Senior Vice
President of Compliance, Internal Audit Privacy, for Health Quest since March 2012.

12. Defendant Health Quest Systems, Inc. is a domestic not-for-pro?t corporation
incorporated under the laws of the State of New York having its principal place of business at

1351 Route 55, Suite 200, LaGrangeville, New York 12540. Health Quest is comprised of

 

 

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numerous hospitals, medical practices, and medical providers located in Putnam, Orange,
Dutchess, Sullivan and Ulster counties. Health Quest is an ?active? parent, and provides billing
and administrative services for all of its subsidiaries.

l3. Defendant Putnam Hospital Center is a domestic not-for-pro?t corporation
incorporated under the laws of the State of New York having its principal place of business at
Stoneleigh Avenue, Carmel, New York. PHC is a wholly-owned subsidiary of Health Quest.
PHC renders medical care, assistance and treatment to the general public, and bills for, and
receives a substantial amount of its revenue from Medicare and Medicaid.

l4. Defendant Vassar Brothers Hospital, doing business as Vassar Brothers Medical
Center, is a domestic not-for-pro?t corporation incorporated under the laws of the State of New
York having its principal place of business at 45 Reade Place, Poughkeepsie, New York. VBMC
is a wholly-owned subsidiary of Health Quest. YBMC renders medical care, assistance and
treatment to the general public, and bills for, and receives a substantial amount of its revenue
from Medicare and Medicaid.

15. Defendant BAF Consultants, LLC, is a domestic limited liability company
incorporated under the laws of the State of New York having it principal place of business at 14
Lost Pond Lane, North Salem, New York 10560. members are Dr. Joel Buchalter and
Dr. Daniel Fauser.

16. Defendant FACS, LLC dfbi?a Fishkill Ambulatory Support Services, LLC, is a
domestic limited liability company incorporated under the laws of the State of New York.
members include, but are not limited to, Mid-Hudson Medical Group, and doctors from

Mount Kisco Medical Group, and Hudson Valley Surgeons, P.C.

 

 

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Defendant Health Quest Home Care, 1nc., is a not-for-pro?t corporation
incorporated under the laws of the State of New York having its principal place of business at 45
Reade Place, Poughkeepsie, New York 12601. Prior to April 2014, Health Quest Home Care
was known as Hudson Valley Home Care, Inc. Health Quest Home Care is a subsidiary of
Health Quest and provides home care to the general public, and bills for, and receives a
substantial amount of its revenue from Medicare and Medicaid.

JURISDICTION AND VENUE

18. This court hasjurisdiction over this action under 31 U.S.C. 3?32(a) and
28 1331 82.1361

19. 1Venue is proper in the Northern District of New York, pursuant to 28 U.S.C. 
1391(1)) and 31 U.S.C. 3?32{a) in that at least one of the defendants can be found, resides
and/?or transacts business in this District and in that a substantial number of the false claims at
issue were submitted or caused to be submitted in this District.

STATUTORY FRAMEWORK
A. The False Claims Act

20. The FCA provides, in pertinent part, that:

. . . [A]ny person who (A) knowingly presents, or causes to be presented, a

false or fraudulent claim for payment or approval; (13) knowingly makes, uses, or

causes to be made or used, a false record or statement material to a false or

fraudulent claim; (C) conspires to commit a violation of subparagraph (A), (B(G) knowingly makes, uses, or causes to be made or used, a false

record or statement material to an obligation to pay or transmit money or property

to the Government, or knowingly conceals or knowingly and improperly avoids or

decreases an obligation to pay or transmit money or property to the Government .
. . is liable to the United States Government . . . .

31: It 7k

(1) [T]he terms ?knowing? and ?knowingly? --

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(A) mean that a person, with respect to information has actual

knowledge of the information; (ii) acts in deliberate ignorance of the truth or

falsity of the information; or (ii) acts in reckless disregard of the truth or falsity of

the information, and

(B) require no proof of speci?c intent to defraud
31 U.S.C. 3729.

21. Section 6402(a) of the Patient Protection and Affordable Care Act of2010
(Enhanced Medicare and Medicaid Program Integrity Provisions), Pub. L. No. I 48, 124 Stat.
I 19, 253-56 (2010), amended the Social Security Act by adding a new provision that addresses
what constitutes an overpayment under the FCA in the context of a federal health care program.
Under this section, an overpayment is de?ned as ?any funds that a person receives or retains
under Title or XIX to which the person, after applicable reconciliation, is not entitled.?
See 42 U.S.C. In addition, this provision specifies in relevant part that an
?overpayment must be reported and returned? within ?60 days after the date on which the
overpayment was identi?ed." Id. 

22. Failure to return any overpayment constitutes a reverse false claim actionable
under section of the False Claims Act.

23. Any person who violates the False Claims Act is liable to the United States for up
to three times the amount of damages sustained by the federal government and civil penalties of
between $5,500 and $11,000 for each claim submitted to the United States.

B. The New York False Claims Act

24. The NYFCA provides, in pertinent part, that any person who:

knowingly presents, or cause to be presented a false or fraudulent
claim for payment or approval;

knowingly makes, uses or causes to be made or used, a false record or
statement material to a false or fraudulent claim; [or]

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conspires to commit a violation of paragraph . . . of this
subdivision;

shall be liable to the state or a local government, as applicable, for a civil
penalty of not less than six thousand dollars and not more than twelve
thousand dollars, plus three times the amount of all damages, including
consequential damages, which the state or local government sustains
because of the act of that person.
NY. Fin. L. 189(a).
25. ?Knowing and knowingly? mean that a person, with respect to information:
has actual knowledge of the information;
(ii) acts in deliberate ignorance of the truth or falsity of the information;
or
acts in reckless disregard of the truth or falsity of the 
NY. Fin. L. 

26. ?State" means ?the state of New York and any state department, board, bureau,
division, commission, committee, public bene?t corporation, public authority, council, of?ce or
other governmental entity performing a governmental or proprietary function for the state.? NY.
Fin. L. 188(9).

C. The Medicare Program

In 1965, Congress enacted Title of the Social Security Act, known as the
Medicare program, to pay for the costs of certain healthcare services. Entitlement to Medicare is
based on age, disability or affliction with end-stage renal disease. See 42 U.S.C. 426, 426A.

28. HHS is responsible for the administration and supervision of the Medicare

Program. CMS, formerly known as the Health Care Financing Administration, is an agency of

HHS and directly responsible for the administration of the Medicare program.

 

 

 

 

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29. The Medicare Program has several parts, one of which, commonly referred to as
?Medicare Part authorizes payments for institutional care, including, hospital, skilled nursing
facility, and home health care. 42 U.S.C. l395c-1395i?4.

30. Medicare Part covers physician services as well as a variety of ?medical and
health services,? including durable medical equipment and supplies.

31. In addition to other limitations on coverage, Medicare covers only those services
that are ?reasonable and necessary.? 42 U.S.C. l395(a)(] 

32. To participate in the Medicare program, a medical provider must ?le a provider
agreement with the Secretary of HHS (?Secretary?). 42 U.S.C. 1395(cc). The provider
agreement requires compliance with the requirements that the Secretary deems necessary for
participation in the program. 1d.

33. Form OMS-855A is the Enrollment Application for providers. All providers,
including Health Quest, PHC, VBMC, and Health Quest Home Care are required to execute this
form to participate in Medicare and receive reimbursement. As part of completing the 
855A, a certi?cation must be executed, which reads in pertinent part:

I agree to abide by the Medicare laws, regulations and program instructions that

apply to this provider. The Medicare laws, regulations, and program instructions

are available through the Medicare contractor. I understand that payment of a

claim by Medicare is conditioned upon the claim and the underlying transaction

complying with such laws, regulations and program instructions (including but

not limited to, the Federal anti?kickback statute and the Stark law), and on the

providers compliance with all applicable conditions of participation in Medicare.

34. The rules governing the Medicare Program are set forth in the statute (the
?Medicare Act?), regulations, and the manuals, rulings and other policy statements issued by

CMS, including, but not limited to the Provider Reimbursement Manual and the CMS Online

Manual System.

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i. Medicare Part A

35. To assist in the administration of Medicare Part A, CMS contracts with entities
known as ??scal intermediaries.? 42 U.S.C. 1395b; see 42 C.F.R. Part 421, Subparts A and B.

36. Upon discharge of Medicare bene?ciaries from a hospital, the hospital submits
Medicare Part A claims for interim reimbursement for items and services delivered to those
bene?ciaries during their hospital stays. 42 C.F.R. 413.1, 413.60, 413.64. Hospitals submit
patient-speci?c claims for interim payments on a Form UB-92 or Form UB-04.

37. In submitting Medicare claim forms, including the UB-923 and UB-04s at issue in
this litigation, providers must certify that the information included on the form presents an
accurate description of the services rendered and that the services were medically necessary.

38. The Secretary, acting through the ?scal intermediaries, reimburses hospitals in
accordance with the laws and HHS regulations governing the Medicare program. 42 U.S.C. 
1395h.

39. Medicare reimburses inpatient hospital costs pursuant to the inpatient hospital
prospective payment system Under PPS, hospitals, including PHC and VBMC, are
reimbursed a prospectively determined amount for each discharge, depending on the diagnosis?
related group which is assigned to the discharge. 42 U.S.C. 1395ww(d); 42 CPR. 
412.1 et seq.

40. This case involves, among other things, fraudulent hospital cost reports which
PHC and VBMC submitted, and BAF and ACS caused to be submitted, to the Medicare
program. A key purpose of the Medicare cost report system is to protect the federal government

at all times from loss due to mistake or fraud. This goal is accomplished in several ways.

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First, as a prerequisite to ?nal payment by Medicare Part A, CMS requires
hospitals, including PHC and VBMC, to submit hospital cost reports annually. Cost reports are
the ?nal claim that a provider hospital submits to the ?scal intermediary for items and services
rendered to Medicare bene?ciaries. Each year?s report covers all the interim requests for
reimbursement made on the UB-92 and UB-04 forms submitted during that cost reporting year.

42. Medicare relies upon the hospital cost report to determine whether the provider is
entitled to more reimbursement than already received through interim payments, or whether the
provider has been overpaid and must reimburse Medicare. 42 C.F.R. 405.1303, 4 i 3.60 and
413154090). Each cost report form reflects this reliance because it expressly states the
consequences of a failure or refusal to certify:

This report is required by law (42 U.S.C. 1395g; 42 C.F.R. Failure

to report can result in all interim payments made since the beginning of the cost

report being deemed overpayments. (42 U.S.C. 1395g).

42 C.F.R. 405.1803, 413.60, and Cost reports are due on or before the last day of
the ?fth month following the close of the cost report period. Thereafter, it may take 18 months
or so for CMS, through its fiscal intermediaries, to complete an audit of the cost report.

43. Second, after its review of the cost report, the ?scal intermediary issues a Notice
of Program Reimbursement with its ?ndings regarding the reconciliation of interim
payments and the actual amount of the ?nal payment as determined by the ?scal intermediary.
Should the ?scal intermediary?s audit conclude that an overpayment was made, that ?nding is
reported in the NPR. The NPR serves as the basis for the intermediary immediately demanding
payment of the contested amount within thirty (30) days, or it can withhold the contested amount

from on-going reimbursements for the current year?s services. 42 C.F.R. 405.1803 3:

413.646).

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44. Third, the ?scal intermediary has the authority to demand or implement
immediate repayment of the full contested amount, even though the provider has several levels
of appeals with the HHS bureaucracy, as well as a right to appeal to the appropriate United States
District Court and the respective Circuit Court of Appeals after applicable administrative
remedies have been exhausted.

45. Each hospital cost report contains a certi?cation, which is broad and explicit, and
must be signed by the chief administrator of the provider or a responsible designee of the
administrator. As a preface to the cost report?s certi?cation, the following warning appears:

MISREPRESENTATION OR FALSIFICATION OF ANY IN FORMATION
CONTAINED IN THIS COST REPORT MAY BE PUNISHABLE BY
CRIMINAL, CIVIL AND ADMINISTRATIVE ACTION, FINE ANDIOR
IMPRISONMENT UNDER FEDERAL LAW. FURTHERMORE, IF
SERVICES IDENTIFIED IN THIS REPORT WERE PROVIDED OR
PROCURED THROUGH THE PAYMENT DIRECTLY OR INDIRECTLY OF
A KICKBACK OR WERE OTHERWISE ILLEGAL, CRIMINAL, CIVIL AND
ADMINISTRATIVE ACTION, FINES IMPRISONMENT MAY
RESULT.

46. For all the fiscal years at issue here, the responsible provider of?cial was
required to certify, and did certify, in pertinent part:

I HEREBY CERTIFY that have read the above statement and that I have

examined the accompanying electronically filed or manually submitted cost report

and . . . that to the best of my knowledge and belief, it is a true, correct and

complete statement prepared from the books and records of the provider in

accordance with applicable instructions, except as noted. I further certify that I

am familiar with the laws and regulations regarding the provision of health care

services, and that the services identi?ed in this cost report were provided in

compliance with such laws and regulations.

47. Thus, PHC and VBMC, as Medicare hospital providers, were required to, and
did, execute the cost report certi?cation for each year from 2000 to 2014 to certify, among other

things, that the ?led hospital cost report is (I) truthful, 122., that the cost information contained in

the report is true and accurate; (2) correct, tie. that PHC and VBMC were entitled to

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reimbursement for the reported costs in accordance with applicable instructions; (3) complete,
tie. that the hospital cost report is based upon all information known to PHC and VBMC as the
providers; and (4) that the services provided in the cost report were billed in compliance with
applicable laws and regulations, including the Stark Statute (described below).

ii. Medicare Part 

43. Medicare Part covers physician services and a variety of ?medical and health
services.?

49. 42 U.S.C. 1861(q) de?nes ?physician services? as certain professional services
performed by physicians, including surgery, consultation, and home, office, and institutional
calls.

50. To assist in the administration of Medicare Part B, CMS contracts with ?carriers.?
Carriers, typically insurance companies, are responsible for processing and paying claims.

51. Doctors and other providers are required to submit Medicare Part claims to the
carrier for payment on HCFA Form 1500, which provides, in pertinent part: ?This is to certify
that the foregoing information is true, accurate and complete. I understand that payment and
satisfaction of this claim will be from Federal and State funds, and that any false claims,
statements, or documents, or concealment of a material fact, may be prosecuted under applicable
federal or State laws.? 42 CPR 424.32.

52. No Part Medicare bene?ts may be paid unless this form is received as required
by existing law and regulations. 42 C.F.R. 424.32.

53. Under Part B, Medicare will generally pay 80 percent of the ?reasonable? charge

for medically necessary items and services provided to bene?ciaries. See 42 U.S.C. 

l395l(a)(1), 1395y(a)(1). For most services, the reasonable charge has been de?ned as the

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lowest of the actual billed charge, the provider?s customary charge, or the prevailing
charge for the service in the locality. 42 C.F.R. 405502-504.
D. The Medicaid Program

54. Medicaid is ajoint federal-state program that provides health care bene?ts for
certain groups, primarily the poor and disabled. The federal involvement in Medicaid is largely
limited to providing matching federal funds and ensuring that states comply with minimum
standards in the administration of the program.

55. The federal Medicaid statute sets forth the minimum requirements for state
Medicaid programs to qualify for federal funding, which is called federal ?nancial participation
(FFP). 42 U.S.C. 1396 et seq.

56. To participate in the Medicaid program, a state must develop a plan that is
approved by the Secretary as meeting federal requirements. The state pays quali?ed providers
for furnishing necessary services covered by the state plan to individuals who are eligible for
medical assistance. The federal government contributes a proportion of the costs that each
participating state incurs in purchasing items and services from quali?ed providers on behalf of
eligible persons. The state bears the remainder of the costs. In New York, funding for the
Medicaid program is approximately 50% federal funds and 50% state and local funds.

57. New York?s Medicaid program must, and does cover hospital services. 42
42 11.3.0 

53. In New York, providers, including hospitals, participating in the Medicaid
program submit claims for services rendered to Medicaid beneficiaries to the New York State

Department of Health for payment.

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59. The Medicaid Program pays participating hospitals a ?xed amount per discharge
based on the Medicaid beneficiary?s discharge diagnosis. Speci?cally, the participating hospital
submits a claim for reimbursement to Medicaid under the DRG payment system, which
reimburses a fixed amount per patient based on the DRG code into which the patient is classi?ed
by the hospital. The average cost of care for each DRG determines the reimbursement amount,
rather than the actual cost of care for each bene?ciary.

60. Providers rendering medical care to Medicaid?eligible patients may be reimbursed
by the Medicaid program for their services. Upon submission of a claim, the provider is
reimbursed for approved services rendered in accordance with a standard scheduled rate for each
particular service provided.

61. New York State Medicaid regulations explicitly prohibit Medicaid providers from
seeking reimbursement for services rendered to patient who come to their facility through
payment of referral fees.

62. In particular, 18 N.Y.C.R.R. 504.6(d) requires that a provider submit Medicaid
claims only for services provided in compliance with Title 18 of the Of?cial Compilation of
Code, Rules and Regulations of New York State.

63. 18 N.Y.C.R.R. 515.2(b) prohibits as an ?unacceptable practice?:

(5) Bribes and Kickbacks . . . soliciting or receiving either directly or indirectly

any payment (including any kickback, bribe, referral fee, rebate or discount),

whether in cash or in kind, in return for referring a client to a person for any

medical care, services or supplies for which payment is claimed under the
program[; and]

offering or paying either directly or indirectly any payment (including any
kickback, bribe, referral fee, rebate or discount), whether in cash or in kind, in
return for referring a client to a person for any medical care, services or supplies
for which payment is claimed under the program.

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64. 18 N.Y.C.R.R. 515.2(a) also speci?cally prohibits as an ?unacceptable practice?
conduct that is contrary to:

(3) the of?cial rules and regulations of the Departments of Health, Education and

Mental Hygiene, including the latter department?s offices and divisions, relating

to standards for medical care and services under the program; or

(4) the regulations of the Federal Department of Health and Human Services
promulgated under title XIX of the Federal Social Security Act.

65. Title 18 further provides that ?no payments will be made to or on behalf of any
person for the medical care, services or supplies furnished . . . in violation of any condition of
participation in the program," 18 N.Y.C.R.R. and that Medicaid payments may
be withheld ?when [the Department] has reliable information that a provider is involved in fraud
or willful misrepresentation involving claims submitted to the program,? id. at 

66. To receive reimbursement from Medicaid in New York State, all providers who
participate in electronic billing, as does PHC and VBMC, must sign a Certification Statement for
Provider Utilizing Electronic Billing (the ?Medicaid Electronic Certi?cation?) every year. The
Medicaid Electronic Certi?cation reads, in pertinent part:

I (or the entity) have furnished or caused to be furnished the care, services and

supplies itemized and done so in accordance with applicable federal and state

laws and regulations.
a: 

In submitting claims under this agreement I understand and agree that (or the
entity) shall be subject to and bound by all rules, regulations, policies, standards,
fee codes and procedures of the New York State Department of Health as set forth
in title 18 of the Of?cial Compilation of Codes, Rules and Regulations of New
York State and other publications of the Department, including Medicaid
Management Information Systems Provider Manuals and other official bulletins
of the Department.

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E. The Federal Anti?Kickback Statute

67. The federal Anti?Kickback Statute, 42 U.S.C. arose out of
Congressional concern that payoffs to those who can influence healthcare decisions will result in
goods and services being provided that are medically unnecessary, of poor quality, or harmful to
a vulnerable patient population. To protect the integrity of the program from these harms, which
are dif?cult to detect, Congress enacted a per se prohibition against the payment of kickbacks in
any form, regardless of whether the particular kickback gave rise to overutilization or poor
quality or care. First enacted in 1972, Congress strengthened the statute in 1977 and 1987 to
ensure that kickbacks masquerading as legitimate transactions did not evade its reach, See
Social Security Amendments ot?1972, Pub. L. No. 92-603, 242(b) and 42 U.S.C. 1320a-
Medicare-Medicaid Antifraud and Abuse Amendments, Pub. L. No. 95-142; Medicare and
Medicaid Patient and Program Protection Act of 1987, Pub. L. No. 100-93.

68. The Anti-Kickback Statute prohibits any person or entity from making or
accepting payment to induce or reward any person for referring, recommending or arranging for
federally-funded medical services, including services provided under the Medicare or Medicaid
programs. In pertinent part, the statute states:

Illegal remuneration

(1) Whoever knowingly and willfully solicits or receives any remuneration

(including any kickback, bribe, or rebate] directly or indirectly, overtly or

covertly, in cash or in kind 

(A) in return for referring an individual to a person for the furnishing or

arranging for the furnishing of any item or service for which payment may

be made in whole or part under a Federal health care program, . . .

shall be guilty of a felony and upon conviction thereof, shall be ?ned not more
than $25,000 or imprisoned for not more than ?ve years, or both.

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(2) Whoever knowingly and willfully offers or pays any remuneration
(including any kickback, bribe, or rebate) directly or indirectly, overtly or
covertly, in cash or in kind to any person to induce such person 

(A) to refer an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may he made in
whole or part under a Federal health care program, . . .

shall be guilty of a felony and upon conviction thereof, shall be ?ned not more
than $25,000 or imprisoned for not more than five years, or both.

42 U.S.C. 

69. Violation of the statue can also subject the perpetrator to exclusion from
participation in federal health care programs and, effective August 6, 1997, civil monetary
penalties of $50,000 per violation and three times the amount of remuneration paid. 42 U.S.C. 
and 42 U.S.C. 

F. The Stark Statute

T0. Enacted as amendments to the Social Security Act, 42 U.S.C. 1395nn
(commonly known as the ?Stark Statute?) prohibits a hospital (or other entity providing
designated health services) from submitting Medicare claims for designated health services (as
de?ned in 42 U.S.C. 1395nn(h)(6)) based on patient referrals from physicians having a
??nancial relationship? (as de?ned in the statute) with the hospital, and prohibits Medicare from
paying any such claims. The regulations implementing 42 U.S.C. 1395nn expressly require
that any entity collecting payment for a healthcare service ?performed under a prohibited referral
must refund all collected amounts on a timely basis.? 42 C.F.R. 41 L353 (2006).

The Stark Statute establishes the clear rule that the United States will not pay for
designated health services prescribed by physicians who have improper ?nancial relationships
with other providers. The statute was designed speci?cally to prevent losses that might he

suffered by the Medicare program due to questionable utilization of designated health services.

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22. Congress enacted the Stark Statute in two parts, commonly known as Stark 1 and
Stark 11. Enacted in 1989, Stark 1 applied to referrals of Medicare patients for clinical laboratory
services made on or after January 1, 1.992, by physicians with a prohibited ?nancial relationship
with the clinical lab provider unless a statutory or regulatory exception applies. See Omnibus
Budget Reconciliation Act of 1989, PL. 101w239, 6204.

7 3. In 1993, Congress extended the Stark Statute (Stark II) to referrals for ten
additional designated health services. See Omnibus Reconciliation Act of 1993, P.L. 103-66, 
13562, Social Security Act Amendments of 1994, PL. 103-432, 152.

T4. The Stark Statute prohibits a hospital from submitting a claim to Medicare for
?designated health services? that were referred to the hospital by a physician with whom the
hospital has a ??nancial relationship,? unless a statutory exception applies. ?Designated health
services? include inpatient and outpatient hospital services. 42 [1.8.0 1395nn(h)(6).

75. In pertinent part, the Stark Statute provides:

Prohibition of certain referrals
(1) In general

Except as provided in subsection of this section, if a physician . . . has
a ?nancial relationship with an entity speci?ed in paragraph (2), then --

(A) the physician may not make a referral to the entity For the
furnishing of designated health services for which payment
otherwise may be made under this subchapter, and

(B) the entity may not present or cause to be presented a claim
under this subchapter or bill to any individual, third party payer, or
other entity for designated health services furnished pursuant to a
referral prohibited under subparagraph (A).

42 use. l395nn(a)(l).

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2'6. When determining whether a direct or indirect compensation arrangement exists
between a physician and an entity to which the physician refers patients for designated health
service, the referring physician stands in the shoes of: (I) another physician who employs the
referring physician; (2) his or her wholly-owned professional corporation; (3) a physician
practice that employs or contracts with the referring physician; or (4) a group practice of which
the referring physician is a member or independent contractor.

'17. The Stark Statute further provides that Medicare will not pay for designated
health services billed by a hospital when the designated health services resulted from a
prohibited referral under subsection 42 U.S.C. l395nn(g)(l).

78. ?Financial relationship? includes a ?compensation arrangement,? which means
any arrangement involving any remuneration paid directly or indirectly to a referring physician.
42 U.S.C. 1395nn(h)(l)(A) and 

79. The Stark Statute and regulations contain exceptions for certain compensation
arrangements. These exceptions include, among others, ?bona ?de employment relationships,?
?personal services arrangements," and ?physician incentive plans.?

30. In order to qualify for the Stark Statute?s exception for bona ?de employment
relationships, compensation arrangements must meet, inter alia, the following statutory
requirements: (A) the amount of the remuneration is fair market value and was not determined
in a manner that takes into account (directly or indirectly) the value or volume of referrals, and
(B) the remuneration would be commerciaily reasonable even in the absence of referrals from the
physician to the hospital. 42 U.S.C. l395nn(e)(2)(B) and 

8] . In order to qualify for the Stark Statute?s exception for personal services

arrangements, a compensation arrangement must meet, inter alia, the following statutory

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requirements: (A) the compensation does not exceed fair market value, and (B) is not
determined in a manner that takes into account the volume or value of any referrals or other
business generated between the parties (unless it falls within a further ?physician incentive pl an"
exception as described in the statute). 42 U.S.C. 

82. A ?physician incentive plan? under l395nn(e)(3) is de?ned very narrowly, and
only applies to compensation arrangements tha ?may directly or indirectly have the effect of
reducing or limiting services provided with respect to individuais enrolled with the entity.? 42
U.S.C. l395nn(e)(3)(B)(ii).

83. The Stark Statute also applies to claims for payment under Medicaid, and federal
funds may not be used to pay for designated health services through a state Medicaid program.
42 use. 1396b(s).

THE FRAUDULENT SCHEMES

A. Health Quest and Its Subsidiaries Engage in Physician Arrangements
That Violate Stark and Anti-Kickback Laws

84. Beginning in 2008, Health Quest retained Deloitte to conduct an internal audit
related to physician arrangements for Health Quest. This audit found, among other things, that
policies and procedures had not been consistently adhered to, that there was no evidence of legal
or management review of contracts with ?auto-renewals? or open ended terms, and that there
was insuf?cient supporting documentation of payments to physicians. An internal audit
performed by Health Quest during 20]] found similar issues with supporting documentation.

85. Notwithstanding these audits, Health Quest, and its subsidiary hospitals,
continued to make payments to physicians under contracts that violate Stark and Anti-Kickback

laws. Speci?cally, Health Quest and its subsidiary hospitals have entered into long-term

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contracts, unsupported by any determination of fair-market value, and with insuf?cient or no
documentation to support payments to physicians made pursuant to the contracts.

36. Two examples of such contracts are contract with BAF Consultants and
contract with FACS.

Putnam Hospital Center and BAF Consultants

87. members are Dr. Joel Buchalter and Dr. Daniel Fauser.

38. Both Dr. Buchalter and Dr. auser are founding partners, owners! members of
Somers Orthopedic Surgery Sports Medicine, PL LC. Somers Orthopedic is a medical practice
with of?ces in Carmel, Newburgh, Mt. Kisco, and ishkill, New York.

39. In July 2000, PHC and BAF entered into a contract pursuant to which PHC
agreed to pay BAF a combined annual compensation of $248,000 (the Contract?),
purportedly for administrative services to be provided by Dr. Buchalter and Dr. auser in
connection with an ambulatory surgery center to be created at PHC.

90. In February 2004, the BAF Contract was amended to assign all of ?rights,
duties and obligations? under the agreement to Dr. Buchalter and Dr. Fauser. The amendment
further provided that PHC would employ the physicians to provide the administrative services,
and that the physicians would devote, in the aggregate, a minimum of 500 hours per year to the
performance of the administrative services.

In addition, the 2004 amendment required Dr. Buchalter and Dr. Fauser to
provide on-call services for orthopedic patients, including 24-hour per day, 7 day per week,

stand-by service call. Upon information and belief, neither doctor ever performed these services.

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92. From 2004 through 2006, Dr. Buchalter and Dr. Fauser were placed on 
?Executive? payroll, and paid via ADP, despite the fact that neither performed any work for
PHC.

93. Beginning in 2007, Dr. Buchalter and Dr. Fauser were entered into Health Quest?s
payroll system, API, as part-time ?employees,? despite the fact that neither performed any work
for PHC.

94. The BAF Contract, as amended, required that written records showing the dates,
times, hours and nature of administrative services provided be maintained and submitted to PI-IC
weekly.

95. Notwithstanding this requirement, payment was approved by a member of the
PHC Executive team and was ?hard-coded? to reflect that Dr. Buchalter and Dr. Fauser had
each worked 1.95 hours per day from Monday through Friday, regardless of whether the doctors
had provided any administrative services or even been on premises. This computer
coding resulted in approximately $75,000 in income being paid to each of the two doctors
annually.

96. The BAF Contract, as amended, further required that written time records be
maintained to show the dates, times, hours, and clinical services performed on a weekly basis.

97. BAP was paid approximately $8,400 (or approximately $100,000
annually) via a recurring payment established with the Health Quest Account Payable. The
Health Quest Check Request form prepared by Health Quest Accounts Payable states ?No Time

Sheet Required, Per Contract.?

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98. According to current President, the PRC Director of Finance had asked
Health Quest?s former Chief Financial Of?cer about the payments and was told ?don?t worry
about it ?just pay it.?

99. As owners of Somers Orthopedic, Dr. Buchalter and Dr. Fauser controlled and
directed all referrals of patients treated at Somers Orthopedic to PHC. Somers Orthopedic
generates approximately $40 million in revenue annually for PHC.

100. in short, the payments to BAF were made to induce Dr. Buchalter and Dr. Fauser
to refer Somers Orthopedic patients to PHC.

10]. As early as January 2010, the RAF contract was identi?ed in an audit as not in
compliance with the Stark Law insofar as the contract did not have a fair market value, the
contract was a ?long?term? contract for ?fteen years, and there was insuf?cient documentation to
establish that the payments were consistent with the terms of the contract. Indeed, according to
the current PHC President, he was aware of issues with the BAF contract at the time he accepted
the position in February 2014.

102. Notwithstanding these ?ndings, the contract was not terminated until December
31, 2014.

103. Moreover, Health Quest and PHC have failed to refund any payments to Medicare
or Medicaid connected to the BAP contract, despite the fact that has been aware of the
problems with the BAP contract for years. Indeed, Health Quest ?led a self-disclosure
concerning other issues in March 2014, but faited to make any disclosure with respect to

the BAF contract.

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(II) Vassar Brothers Medical Center and Fish kill Ambulatory Support Services

104. FACS dfbfa Fishkill Ambulatory Support Services is a domestic limited liability
company. members include, but are not limited to, Mid-Hudson Medical Group, and
doctors from Mount Kisco Medical Group, and Hudson Valley Surgeons, RC.

105. Upon information and belief, VBMC owns 14% of FACS and the medical
practices and doctors own the remaining 86%.

l06. In August 2001, VBMC entered into a Transfer and Af?liation Agreement with
the Fishkill Ambulatory Surgery Center, located at 200 Westage Drive, Fishkill, New York, for
the referral and transfer of patients.

10?. In December 2001, VBMC and FACS entered into a contract pursuant to which
VBMC agreed to pay FACS annual compensation of $168,000 (the Contract?),
purportedly for consulting services to be provided in connection with the Fishkill Ambulatory
Surgery Center. The ACS Contract also contained a non-compete provision barring any
person or entity af?liated with FACS from having a ?nancial interest in any ambulatory surgery
center within a twenty mile radius of VBMC or the Fishkill Ambulatory Surgery Center during,
or within one year after termination, of the ACS Contract.

103. In April 2004, the PACE Contract was amended to expand the de?nition of
consulting services to include being ?on call" during regular business hours to respond to the on-
site manager of the ambulatory surgery center with respect to human resources and staf?ng
issues, and cost containment and quality improvement issues.

109. The FACS Contract, as amended, required FACS to maintain and submit on a

basis written documentation of the consulting services, including a written log or time

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Case Document 1 Filed 01/21/16 Page 26 of 52

sheet signed by the physician providing the services and showing dates, times, hours, and the
nature of services performed.

110. The FACS Contract, as amended, also required FACS to develop and maintain an
on-call schedule for physicians designated by FACS to on-call as provided in the contract.

111. According to Health Quest?s Vice-President of Finance, payments for
administrative services under the FACS Contract were terminated in 201 1 because the Director
of the ishkill Ambuiatory Surgery Center reported that the physicians were not providing any
services.

112. However, payment for consulting services continued to be paid to FACS until the
end of 201 4.

113. Mid-Hudson Medical Group, Mount Kisco Medical Group, and Hudson Valley
Surgeons controlled and directed all referrals of patients treated at those practices to the
Fishkill Ambulatory Surgery Center and VBMC. These medical practices generate substantial
revenue annually for VBMC. For example, Mid-Hudson Medical Group alone accounts for
approximately 20% of the inpatient volume at VBMC.

114. In short, the payments to ACS were made to induce doctors to refer patients
from Mid-Hudson Medical Group, Mount Kisco Medical Group, and Hudson Valley 
Surgeons to the Fishkill Ambulatory Surgery Center and VBMC.

15. As early as 2013, the FACS Contract was identi?ed as an expired contract by
Health Quest.

1 16. Notwithstanding the fact that the contract expired in 2006, VBMC continued to

make payments under the contract until December 2014.

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117. Moreover, Health Quest and VBMC have failed to refund any payments to
Medicare or Medicaid connected to the FACS contract, despite the fact that VBMC has been
aware of the problems with the FACS contract for years. Indeed, Health Quest ?led a self-
disclosure concerning other Stark issues in March 2014, but failed to make any disclosure with
respect to the FACS contract.

False and Fraudulent Claims and Statements

118. The physicians with whom PHC and VBMC entered into ?nancial relationships
speci?ed in paragraphs 84 17 above referred patients, including Medicare and Medicaid
patients, to PHC and VBMC in violation of the Stark Statute.

19. PHC and VBMC, in turn, presented, or caused to be presented through the ?scal
intermediary and carrier, claims for payment to the Medicare program designated health services
provided on referrals from the physicians with whom it had entered into prohibited financial
relationships as set forth in paragraphs 84 - 17.

120. PHC and VBMC also presented, or caused to be presented through the New York
State Department of Health, claims for payment to the Medicaid program for designated health
services provided on referrals from the physicians with whom it had entered into prohibited
?nancial relationships as set forth in paragraphs 84 -l 17'.

l2l. PHC and VBMC thereby obtained payments from the United States and the State
of New York in violation of the Stark Statute.

122. Under the FCA, 31 U.S.C. 3729(a)(l)(A), and the NYFCA, NY. Fin. Law 
189(1)(a), the claims set forth above were false andfor fraudulent because PHC and VBMC were

prohibited by the Stark Statute from obtainin payment from the United States and the State of

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Case Document 1 Filed 01/21/16 Page 28 of 52

New York for claims for designated health services provided on referrals from the physicians
with whom it had entered into ?nancial relationships.

123. PHC and VBMC also violated the FCA, 31 U.S.C. and the
NYFCA. N.Y. Fin. Law 1390 by making false statements, or causing false statements to
be made by the ?scal intermediary and carrier, to get claims paid by Medicare for designated
health services provided on referrals from the physicians with whom it had entered into ?nancial
relationships as set forth above. and certifications on their cost reports that their
statements were ?true" and}r or ?correct? and that they were entitled to payment of their claims for
such services were false or fraudulent because the Stark Statute prohibited PHC and VBMC from
receiving payments from the United States and the State of New York for those claims.

124. PHC and VBMC knowingly made, used, or caused to be made or used false
records and statements to conceal, avoid or decrease their obligations to pay or transmit money
to the United States and the State of New York to avoid refunding payments made in
violation of the Stark Statute) by certifying on their annual cost reports that the services were
provided in compliance with federal and state law, all in violation of the FCA, 3] U.S.C. 
3729(a)(1)(G) and the NYFCA, N.Y. Fin. Law l89(1)(h). The false certi?cations, made with
each annual cost report submitted to the government, were part of and unlawful
scheme to defraud Medicare and Medicaid, and other government healthcare programs.

125. All claims submitted to Medicare or Medicaid by PHC and VBMC for designated
health services referred to by any of the physicians identi?ed above were false claims submitted

to the United States and the State of New York.

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126. and VBMC presented, or caused to be presented, all of said false claims with
actual knowledge of their falsity, or in deliberate ignorance or reckless disregard that such claims
were false and fraudulent.

B. Fraudulent Billing for Enhanced Provider Based Billing Rates

127. In December 2013, VBMC acquired a medical practice known as ?The Heart
Center,? including four cardiac testing locations.

128. Between July 1, 2014 and November 2014, VBMC billed for cardiac testing
services provided at those facilities under an enhanced rate, known as ?provider based billing
rates,? despite the fact that VBMC knew that it was not eligible to bill for these services at the
higher rate.

129. Pursuant to 42 CPR. 413.65, a medical facility that is not located on a hospital
campus may seek ?provider-based? status if it meets certain criteria.

130. Under provider-based billing, the physician?s of?ce or network becomes a
department of the hospital, and patients are charged for both physician professional services
(Medicare Part B) and the facility fee (Medicare Part A).

131. A medical facility with ?provider-based? status generates more revenue for the
system from physician services than a free?standing facility. For example, in 2014, for an
Established Patient Level 4 visit by a physician (99214), a free-standing clinic received $107.83
from Medicare, while a provider-based clinic received a total of $172.26 $79.17 from
Medicare under the Part fee schedule and an additional $93.09 for the Ambulatory Payment
Classi?cation under Medicare?s Part A Outpatient Prospective Payment System nearly $65

more per patient.

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I32. To qualify for provider-based status, a medical facility must meet the
requirements set forth in 42 C.F.R. 413.65(d) and including:

A) Physician of?ces must be on campus or within 35 miles of the main
campus;

B) All of?ces designated as provider-based must be identi?ed as part of
the hospital, and the billing arrangement must be posted and properly
explained;

C) All professional staff must have clinical privileges at the hospital;

D) Medical staf?'other professional committees at main provider are
responsible for medical activities in the clinic including Quality Assurance
(QA), Utilization Review (UR) and coordination and integration of
services;

E) Clinical records for both the hospital and physician must be integrated;

F) Inpatient and outpatient services of the facility and the hospital must be
integrated;

G) All clinics must be under the same license and tax identi?cation
number as the hospital, and the staff must be seen as hospital employees.
Additionally, the medical director for the physician network must act as a
department head, and the of?ces must adhere to the same quality and
safety monitoring programs as the hospital;

H) Patients are registered as hospital outpatients and complete the same
paperwork as other patients that are seen in campus-based services;

I) The entity that operates the clinics must be owned and controlled by the
hospital;

J) Each practicer'clinic must maintain and report ?nancial performance as
part of the hospital?s financials and be included on the Cost Report; and

K) The of?ce locations must meet hospital infection control, disaster
plan, EMTALA, and access requirements, which typically include CAHO
surveys. The hospital must maintain the same monitoring and oversight of
the of?ce as it does for any other department of the hospital.

133. In addition, for off-campus provider-based sites, patients must be furnished with a

statement of the amount of the patient?s potential ?nancial liability prior to the delivery of

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services, or, if the exact type and extent of care are not known prior to the delivery of care, a
notice that the patient will incur a coinsurance obligation that would not be incurred if the
provider-based site were freestanding, an estimate based on typical or average charges for visits
to the provider-based site, and a statement that the patient?s actual liability will depend upon the
actual services furnished. 42 CPR. 

?34. Although hospitals are not required to formally apply for provider-based status,
they are encouraged to ?attest? that they meet all of the requirements and submit that attestation
to their Fiscal Intermediary. The professional portion of the service is billed in the CMS 1500
billing platform and paid based on the ?facility? version of the fee according to the Medicare Part
physician fee schedule. The hospital charge is submitted on a U304 and paid under
Medicare APC rates.

135. VBMC began billing for cardiac testing services provided at The Heart Center
facilities under the enhanced provider based billing rates on July 1, 2014.

136. Notwithstanding the fact that VBMC began billing for the services performed at
The Heart Center facilities as ?provider?based" on July 1, 2014, The Heart Center did not meet
all the requirements of 42 C.F.R. 413.65 until November 2014.

13?. Speci?cally, between July 1, 2014 and November 1, 2014, the Heart Center failed
to meet the following requirements:

A) VBMC did not maintain monitoring or oversight of the facility, as
required by 42 CPR. until sometime after October 20, 2014.

B) Medical records for patients treated at The Heart Center were not
integrated into a uni?ed retrieval system or cross-referenced with 
medical records, as required by 42 (If .R. Speci?cally, VBMC
providers and the Health Information Management Department staff did not have
access to (the Heart Center EMR) until October 1, 2014, and a link to
was not placed into Cemer (the VBMC EMR) until October 14, 2014.

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A project integrating the Electronic Master Patient Index (EMPJ) was not
completed until October 20, 2014.

C) The Heart Center was not held out to the public and other payers as part of

VBMC, as required by 42 CPR. until at least September 27,

2014, when its website was updated. website was not updated to re?ect

the cardiac testing locations were VBMC departments until October 1, 2014.

D) The Heart Center facilities failed to provide the notices concerning

additional ?nancial liability to patients, as required by 42 C.F.R. 4  

until November 3, 2014.

138. At several meetings in the fall of 2014, attended by members of management who
had approved billing at the enhanced rate, it was discussed that VBMC was not meeting the
requirements for provider based billing for The Heart Center facilities.

139. During September 2014, the Relator told his superior that a bill-hold should be
considered for all provider based billing claims at the four Heart Center locations until all
requirements were met.

140. On November 5, 2014, the Relator recommended in writing to his superior that
the bill-hold be instituted until a determination was made that all required criteria were being
met, and that all technical claims dating back to July 1, 2014 for services billed as provider-based
from the four Heart Center locations be adjusted.

141. On March 12, 2015, the Relator wrote a memo to his superior recommending a
refund of all technical claims from the four Heart Center locations from July I, 2014 to the
beginning of November 2014.

142. At least as early as September 30, 2014, Relator advised the Health Quest

Compliance Audit Committee of the improper use of provider-based billing in connection

with the Heart Center locations.

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143. In or about the fourth quarter of 2014., Health Quest and VBMC set a reserve of
$1.8 million concerning this issue.

144. Notwithstanding this reserve and the Relator?s recommendations, Health Quest
and VBMC have failed to refund the payments improperly received from billing services
rendered at The Heart Center as provider-based.

C. Failure to Repay Overpayment for Home Health Care Where
A Physician Face-to-Face Encounter Was Not Documented

145. As a condition of payment for Medicare home health coverage, Section 6407 of
the Affordable Care Act of 2010, 42 U.S.C. 1395f requires that a patient must have a
face-to-face encounter with the physician who certi?es the need for home health services. See
42 C.F.R. ?424.22.

146. During the ?rst and second quarter of 2014, the Health Quest Of?ce of Corporate
Compliance Internal Audit Privacy conducted an audit of defendant Health Quest Home
Care?s compliance with the face-to-face requirements.

147. The audit identi?ed a 63% error rate. The errors related to: documentation that
the face-to-face encounter took place; the completeness of the documentation of the face-totface;
clinical need on the face-to-face form was not in narrative form; the physician?s narrative on the
form did not support a ?nding of clinical need for home care services; plan of care could not be
located; clinical diagnosis on the face-to-face form did not match the plan of care form; and the
face-to-face form was not completed within 90 days prior to, or 30 days following, the start of
services.

148. A second review was then performed on the same sample by a different auditor
within the Compliance department. The results of the second review resulted in the same

identi?ed errors with a higher overall error rate of 

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149. During the exit conference in connection with internal audit, Relator was advised
by the Administrator and Manager of Clinical Services for Health Quest Home Care, that Health
Quest Home Care would attempt to collect the necessary information from the physicians but,
after making a ?good faith effort? would submit claims for payment notwithstanding incomplete
documentation.

150. Due to the signi?cant error rates identified by the internal audit, during the third
and fourth quarters of 2014, a retrospective review of Health Quest Home Care?s compliance
with the face?to?face requirement was conducted by an outside audit ?rm. As a result of this
audit, a reserve of approximately $9 million was established by Health Quest and Health Quest
Home Care in or about December 2014.

151. One year after the reserve was established, on December 4, 2015, Health Quest
refunded approximately $3.5 million to CMS in connection with claims submitted by Health
Quest Home Care for payment for the period April 1, 201 1 through August 31, 2014.

152. Notwithstanding this repayment, Health Quest continues to maintain a reserve of
approximately $5.5 million in connection with these claims.

D. Health Quest and VBMC Improperly Used APG Rate Code 1432 to Receive a
Higher Reimbursement Rate It Was Not Quali?ed to Receive

153. Beginning in 2008, New York State implemented a new Medicaid payment
methodology based on Ambulatory Patient Groups Only services listed on a facility?s
operating certificate may be billed under the APG codes.

154. On January 3, 2012, Health Quest?s billing office was advised by DOH that PHC
could not use APG rate code 1432 for physical therapy because PHC was not approved for
primary medical services. Health Quest was therefore aware that a facility?s operating certi?cate

must list primary medical services to be able to use APG rate code 1432.

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155. Prior to May 2013, VBMC owned and operated the Care Center, an Article 28-
approved clinic offering primary medical services. Upon information and belief, 
ownership of the Care Center enabled VBMC to utilize APG rate code 1432 for reimbursement
under Medicaid for all outpatient services (excluding surgical and emergency room services)
rendered by the hospital or any Article 28 clinic listed on operating license, because
operating certi?cate included primary medical services.

156. In May 2013, however, VBMC sold the Care Center and its operating certi?cate
was amended. Upon completion of the sale, VBMC no longer had a clinic for ?primary medical
services,? and, therefore, was no longer eligible to bill under APG rate code 1432 for any
outpatient and clinic services.

157. On June 2013, an employee in Health Quest?s billing of?ce 5th an email to
the Director of Billing inquiring whether VBMC still had a clinic on its operating certificate and
stating that we do not, then we will no longer be able to bill at . . . It?we no longer
have a clinic associated with our CON then we can no longer utilize APG 1432 Rate code which
will reduce our revenue for INF, RDT, HBO and SLP services (among others)?

158. Notwithstanding this email, Health Quest and VBMC continued to bill for
services under APG Rate code 1432 until December 2015 despite the fact that it was not entitled
to do so.

159. In December 2015, the Health Quest Compliance department directed a ?bill
hold? be placed on all New York State Medicaid claims under APG Rate code 1432.

160. Health Quest and VBMC have received approximately $1 million in
overpayments between May 2013 and December 2015 for services improperly billed under APG

Rate code 1432.

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COUNT I
(All Defend ants)

False Claims Act, 31 U.S.C. 3729(a)(l)(A), Presenting Claims
to Medicare and Medicaid for Designated Health Services
Rendered as a Result of Violations of the Stark Statute and Anti-Kickback Laws
161. Plaintiffs repeat and realleges 1H 1 to 159 as if fully set forth herein.
162. Defendants knowingly provided kickbacks or other illegal remuneration to induce
physicians to refer Medicare and Medicaid patients to them for the provision of medical services.
163. Defendants knowingly presented, or caused to be presented, false and fraudulent
claims for payment or approval to the United States, including those claims for reimbursement
for designated health services rendered to patients who were referred by physicians with whom
PHC and VBMC had entered into prohibited ?nancial relationships in violation of the Stark
Statute andl'or Anti?Kickback Act.
164. Said claims were presented with actual knowledge of their falsity, or with reckless
disregard or deliberate ignorance of whether or not they were false.
165. By virtue of the false or fraudulent claims made and caused to be made by
defendants, the United States has suffered damages and therefore is entitled to treble damages
under the FCA, in an amount to be determined at trial, plus a civil penalty of $5,500 to $11,000

for each violation.

COUNT II
(All Defendants)

False Claims Act, 31 U.S.C. Making or Using False
Records or Statements to Cause Claims to Be Paid
In Cannection with Designated Health Services Rendered
As a Result of Violations of the Stark Statute and Anti-Kickback Laws

166. Plaintiffs repeat and realiege 1 to 165 as if fully set forth herein.

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16?. Defendants knowingly with actual knowledge, in deliberate ignorance of the
truth, or with reckless disregard of the truth) made or used, or caused to be made or used, false
records or statements .. including but not limited to the false certi?cations and representations
made and caused to be made by PHC and VBMC, that the services were provided in compliance
with all laws regarding the provision of health care services to get false or fraudulent claims
paid or approved by the United States.

168. By virtue of the false records or statements made and caused to be made by
Defendants, the United States has suffered damages and therefore is entitled to treble damages
under the FICA, in an amount to be determined at trial, plus a civil penalt}r of $5,500 to $1 1,000

for each violation.

COUNT 
(All Defendants)

False Claims Act, 31 U.S.C. 3729(a)(1)(C), Conspiring to
Submit False Claims in Connection with
Violations of the Stark Statute and Anti?Kickback Laws
I69. Plaintiffs repeat and reallege 111i 1 to 168 as if fully set forth herein.
170. Defendants conspired to defraud the United States by getting a false or fraudulent
claim paid by Medicare andfor Medicaid.
171. By virtue of the conspiracy to defraud the United States, the United States

suffered damages and therefore is entitled to treble damages under the FCA, in an amount to be

determined at trial, plus a civil penalty of $5,500 to $11,000 for each violation.

3?

 

Case Document 1 Filed 01/21/16 Page 38 of 52

COUNT IV
(All Defendants)

False Claims Act, 31 U.S.C. 3729(a)(1)(G)
False Record to Avoid an Obligation to Refund Payments
Received in Connection with Violations of the
Stark Statute and Anti-Kickback Laws

172. Plaintiff repeats and realleges to 171 as if fully set forth herein.

Defendants made and used or caused to be made or used false records or
statements the false certifications made or caused to be made by PHC and VBMC in
submitting the cost reports to conceal, avoid, or decrease an obligation to pay or transmit
money or property to the United States.

174. Said false records or statements were presented with actual knowledge of their
falsity, or with reckless disregard or deliberate ignorance of whether or not they were false.

17'5. By virtue of the false records or false statements made by Defendants, the United
States suffered damages and therefore is entitled to recovery as provided by the FCA of an

amount to be determined at trial, plus a civil penalty of $5,500 to $1 1,000 for each violation.

COUNT 
(All Defendants)

New York False Claims Act, NI. Fin. Law 189(l)(a), Presenting Claims
to Medicaid for Designated Health Services Rendered as a
Result of Violations of the Stark Statute and Anti-Kickback Laws
i216. Plaintiffs repeat and reallege 1111 to 175 as if fully set forth herein.
177. Defendants knowingly provided kickbacks or other illegal remuneration to induce
physicians to refer Medicaid patients to them for the provision of medical services.
178. Defendants knowingly presented, or caused to be presented, false and fraudulent

claims for payment or approval to the State of New York, including those claims for

reimbursement for designated health services rendered to patients who were referred by

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physicians with whom PHC and VBMC had entered into prohibited ?nancial relationships in
violation of the Stark Statute andr'or the Anti-Kickback laws.

1'39. Said claims were presented with actual knowledge of their falsity, or with reckless
disregard or deliberate ignorance of whether or not they were false.

180. By virtue of the false or fraudulent claims made and caused to be made by
defendants, the State. of New York has suffered damages and therefore is entitled to treble
damages under the NYFCA in an amount to be determined at trial, plus a civil penalty of $6,000
to $12,000 for each violation.

COUNT VI
(All Defendants)

New York False Claims Act, N.Y. Fin. Law 189(1)(b), Making or Using False
Records or Statements to Cause Claims to Be Paid
In Connection with Designated Health Services Rendered
As a Result of Violations of the Stark Statute and Anti?Kickback Laws

181. Plaintiffs repeat and reallege 1 to 180 as if fully set forth herein.

132. Defendants knowingly with actual knowledge, in deliberate ignorance of the
truth, or with reckless disregard of the truth) made or used, or caused to be made or used, false
records or statements including but not limited to the false certi?cations and representations
made and caused to be made by PHC and VBMC, that the services were provided in compliance
with all laws regarding the provision of health care services - to get false or fraudulent claims
paid or approved by the State of New York.

133. By virtue of the false records or statements made and caused to be made by
Defendants, the State of New York has suffered damages and therefore is entitled to treble

damages under the NYFCA, in an amount to be determined at trial, plus a civil penalty of $6,000

to $12,000 for each violation.

39

 

 

Case Document 1 Filed 01/21/16 Page 40 of 52

COUNT VII
(All Defendants)

New York False Claims Act, N.Y. Fin. Law Conspiring to
Submit False Claims in Connection with
Violations of the Stark Statute and Anti-Kickback Laws

184. Plaintiffs repeat and reallege 111i 1 to 183 as if fully set forth herein.

185. Defendants conspired to defraud the State of New York by getting a false or
fraudulent claim paid by Medicaid.

186. By virtue of the conspiracy to defraud the State of New York, the State of New
York suffered damages and therefore is entitled to treble damages under the NYFCA, in an

amount to be determined at trial, plus a civil penalty of $6,000 to $12,000 for each violation.

COUNT 
(All Defendants)

New York False Claims Act, .Y. Fin. Law 189(l)(h), False Record to Avoid an
Obligation to Refund Payments Received in Connection with
Violations of the Stark Statute and Anti-Kickback Laws

187. Plaintiffs repeat and reallege 1 to 186 as if fully set forth herein.

188. Defendants made and used or caused to be made or used false records or
statements the false certi?cations made or caused to be made by Pl-lC and VBMC in
submitting the cost reports to conceal, avoid, or decrease an obligation to pay or transmit
money or property to the State of New York.

189. Said false records or statements were presented with actual knowledge of their
falsity, or with reckless disregard or deliberate ignorance of whether or not they were false.

190. By virtue of the false records or false statements made by Defendants, the State of

New York suffered damages and therefore is entitled to recovery as provided by the NYFCA of

an amount to be determined at trial, plus a civil penalty of $6,000 to $12,000 for each violation.

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COUNT IX
(Defendants Health Quest and VBMC)

False Claims Act, 31 U.S.C. 3729(a)(i Presenting Claims
to Medicare for Services Provided at The Heart Center

191. Plaintiffs repeat and reallege 1111 to 190 as if fully set forth herein.

192. Defendant Health Quest and VBMC knowingly presented, or caused to be
presented, false and fraudulent claims for payment or approval to the United States, including
those claims for reimbursement for services rendered to patients of The Heart Center.

193. Said claims were presented with actual knowledge of their falsity, or with reckless
disregard or deliberate ignorance of whether or not they were false.

194. By virtue of the false or fraudulent claims made and caused to be made by
defendants, the United States has suffered damages and therefore is entitled to treble damages
under the FCA, in an amount to be determined at trial, plus a civil penalty of $5,500 to $1 1,000
for each violation.

COUNT 
(Defendants Health Quest and 

False Claims Act, 31 U.S.C. Making or Using False
Records or Statements to Cause Claims to Be Paid
In Connection with Services Provided at The Heart Center
195. Plaintiffs repeat and reallege to 194 as if fully set forth herein.
196. Defendants knowingly with actual knowledge, in deliberate ignorance of the
truth, or with reckless disregard of the truth) made or used, or caused to be made or used, false
records or statements including but not limited to the false certifications and representations

made and caused to be made by Health Quest and VBMC that The Heart Center was entitled to

provider based status to get false or fraudulent claims paid or approved by the United States.

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197. By virtue of the faise records or statements made and caused to be made by
Defendants, the United States has suffered damages and therefore is entitled to treble damages
under the FCA, in an amount to be determined at trial, plus a civil penalty of $5,500 to $11,000
for each violation.

COUNT XI
(Defendants Health Quest and VBMC)

False Claims Act, 31 U.S.C. Conspiring to
Submit False Claims in Connection with
Services Provided at The Heart Center
198. Plaintiffs repeat and reallege 1 to 197 as if fully set forth herein.
199. Defendants conspired to defraud the United States by getting a false or fraudulent
claim paid by Medicare.
200. By virtue of the conspiracy to defraud the United States, the United States
suffered damages and therefore is entitled to treble damages under the CA, in an amount to be

determined at trial, plus a civil penalty of $5,500 to $1 1,000 for each violation.

COUNT X11
(Defendants Health Quest and 

False Claims Act, 31 U.S.C. 3729(a)(l)(G)
False Record to Avoid an Obligation to Refund Payments
Received in Connection with Services Provided at The Heart Center
201. Plaintiff repeats and realleges 111] to 200 as if fully set forth herein.
202. In December 2014, Defendants quanti?ed the overpayment received as a result of
improperly billing services rendered at The Heart Center as provider based billing as $1.8
million.

203. Notwithstanding setting a reserve for $1.8 million in December 2014, Defendants

Health Quest and VBMC have failed to remit any overpayment to CMS.

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204. Under Section 6402(a) of the Patient Protection and Affordable Care Act of 201 0
I (Enhanced Medicare and Medicaid Program Integrity Provisions), Pub. L. No. 1 1-148, 124 Stat.
119, 253-56 (2010), an overpayment is de?ned as ?any funds that a person receives or retains
under Title or XIX to which the person, after applicable reconciliation is not entitled.?
See 42 U.S.C. In addition, this provision specifies in relevant part that an
?overpayment must be reported and returned? within ?60 days after the date on which the
overpayment was identified.? id. 

205. The failure of Health Quest and VB MC to return the overpayment for provider
based billing to Medicare within 60 days constitutes a reverse false claims actionable under
section 3729(a)(l of the False Claims Act.

206. Defendant therefore made and used or caused to be made or used false records or
statements material to an obligation to pay or transmit money to the United States, or knowingly
concealed, avoided, or decreased an obligation to pay or transmit money to the United States.

207. Such false records or statements or knowing concealment, avoidance or decrease
of an obligation to pay or transmit money to the United States were made or done knowingly, as
de?ned in 31 U.S.C. 3729(a)(1).

208. The United States therefore is entitled to recovery as provided by the CA of an
amount to be determined at trial, plus a civil penalty of $5,500 to for each violation.

COUNT 
(Defendants Health Quest and Health Quest Home Care)

. False Claims Act, 31 U.S.C. 3729(a)(l)(A), Presenting Claims
i to Medicare for Home Health Services

209. Plaintiffs repeat and reallege 111i 1 to 208 as if fully set forth herein.

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210. Defendant Health Quest and Health Quest Home Care knowingly presented, or
caused to be presented, false and fraudulent claims for payment or approval to the United States,
including those claims for reimbursement for home health services rendered without proper
documentation of a face-to-face encounter with a physician certifying the need for services.

211. Said claims were presented with actual knowledge of their falsity, or with reckless
disregard or deliberate ignorance of whether or not they were false.

212. By virtue of the false or fraudulent claims made and caused to be made by
defendants, the United States has suffered damages and therefore is entitled to treble damages
under the FCA, in an amount to be determined at trial, plus a civil penalty of $5,500 to $1 1,000
for each violation.

COUNT XIV
{Defendants Health Quest and Health Quest Home Care)

False Claims Act, 31 U.S.C. 3729(a)(l)(B), Making or Using False
Records or Statements to Cause Claims to Be Paid
For Home Health Services

213. Plaintiffs repeat and reallege to 212 as if fully set forth herein.

214. Defendants knowingly with actual knowledge, in deliberate ignorance of the
truth, or with reckless disregard of the truth) made or used, or caused to be made or used, false
records or statements including but not limited to the false certi?cations and representations
made and caused to be made by Health Quest and Health Quest Home Care in connection with
claims for reimbursement for home health services to get false or fraudulent claims paid or
approved by the United States.

215. By virtue of the false records or statements made and caused to be made by

Defendants, the United States has suffered damages and therefore is entitled to treble damages

44

 

Case Document 1 Filed 01/21/16 Page 45 of 52

under the CA, in an amount to be determined at trial, plus a civil penalty of $5,500 to $1 1,000
for each violation.

COUNT XV
(Defendants Health Quest and Health Quest Home Care)

False Claims Act, 31 U.S.C. Conspiring to
Submit False Claims in Connection with
Home Health Services

216. Plaintiffs repeat and reallege 1111 1 to 215 as if fully set forth herein.

21 T. Defendants conspired to defraud the United States by getting a false or fraudulent
claim paid by Medicare.

218. By virtue of the conspiracy to defraud the United States, the United States
suffered damages and therefore is entitled to treble damages under the CA, in an amount to be

determined at trial, plus a civil penalty of $5,500 to $1 1,000 for each violation.

COUNT XVI
(Defendants Health Quest and Hudson Valley Health Care)

False Claims Act, 31 U.S.C. ?3729(a)(1)(G)
False Record to Avoid an Obligation to Refund Payments

Received for Home Health Services Provided by Hudson Valley Health Care

219. Plaintiff repeats and realleges 1 to 218 as if fully set forth herein.

220. In December 2014, Defendants quantified the overpayment received by Health
Quest and Hudson Valley Health Care for home health care as $9.7 million.

221. However, Defendant failed to remit any overpayment to CMS until one year later
in December 2015, and, even, then, repaid only $3.5 million.

222. Under Section 6402(a) of the Patient Protection and Affordable Care Act of 2010
(Enhanced Medicare and Medicaid Program Integrity Provisions), Pub. L. No. 111-148, 124 Stat.

19, 753-56 (2010), an overpayment is de?ned as ?any ?mds that a person receives or retains

45

 

 

Case Document 1 Filed 01/21/16 Page 46 of 52

under Title or XIX to which the person, after applicable reconciliation is not entitled.?
See 42 U.S.C. In addition, this provision specifies in relevant part that an
?overpayment must be reported and returned? within ?60 days after the date on which the
overpayment was identi?ed.? Id. 

223. The failure of Health Quest and Health Quest Home Care to return the
overpayment for home care to Medicare within 60 days constitutes'a reverse false claims
actionable under section 3729(a)(1)(G) of the False Ciaims Act.

224. Defendants therefore made and used or caused to be made or used false records or
statements material to an obligation to pay or transmit money to the United States, or knowingly
concealed, avoided, or decreased an obligation to pay or transmit money to the United States.

225. Such false records or statements or knowing concealment. avoidance or decrease
of an obligation to pay or transmit money to the United States were made or done knowingly, as
de?ned in 3] U.S.C. 3729(a)(l).

226. The United States therefore is entitled to recovery as provided by the FCA of an
amount to be determined at trial, plus a civil penalty of $5,500 to $11,000 for each violation.

COUNT XVII
(Defendants Health Quest and VBMC)

False Claims Act, 31 U.S.C. 3729(a)(] Presenting Claims
to Medicaid for APG Rate Code 1432

22?. Plaintiffs repeat and reallege to 226 as if fully set forth herein.

228. From May 2013 through December 2015, Defendants knowingly presented, or
caused to be presented, false and fraudulent claims for payment or approval to the United States
for APG Rate Code I432 when VBMC was not entitled to use that rate code because it did not

own or operate a clinic for primary medical services.

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229. Said claims were presented with actual knowledge of their falsity, or with reckless
disregard or deliberate ignorance of whether or not they were false.

230. By virtue of the false or fraudulent claims made and caused to be made by
defendants, the United States has suffered damages and therefore is entitled to treble damages
under the FCA, in an amount to be determined at trial, plus a civil penalty of 335,5 00 to $1 1,000
for each violation.

COUNT 
(Defendants Health Quest and 

False Claims Act, 31 U.S.C. 3729(a)(l)(B), Making or Using False
Records or Statements to Cause Claims to Be Paid
By Medicaid for APG Rate Code 1432

231. Plaintiffs repeat and reallege ilil i to 230 as if fully set forth herein.

232. Defendants knowingly with actual knowledge, in deliberate ignorance of the
truth, or with reckless disregard of the truth) made or used, or caused to be made or used, false
records or statements including but not limited to the false certi?cations and representations
made and caused to be made by Health Quest and VBMC, that the services were provided in
compliance with all laws regarding the provision of health care services to get false or
fraudulent claims paid or approved by the United States.

233. By virtue of the false records or statements made and caused to be made by
Defendants, the United States has suffered damages and therefore is entitled to treble damages

under the FCA, in an amount to be determined at trial, plus a civil penalty of $5,500 to $1 1,000

for each violation.



 

Case Document 1 Filed 01/21/16 Page 48 of 52

COUNT XIX
(Defendants Health Quest and VBMC)

False Claims Act, 31 U.S.C. 3729(a)(1)(C), Conspiring to
Submit False Claims to Medicaid for APG Rate Code 1432

234. Plaintiffs repeat and reallege 1 to 233 as if fully set forth herein.

235. Defendants conspired to defraud the United States by getting false or fraudulent
claims under APG Rate Code 1432 paid by Medicaid.

236. By virtue of the conspiracy to defraud the United States, the United States
suffered damages and therefore is entitled to treble damages under the FCA, in an amount to be
determined at trial, plus a civil penalty of $5,500 to $11,000 for each violation.

COUNT XX
(Defendants Health Quest and VBMC)

False Claims Act, 31 U.S.C. 3729(a}(1}(G)
False Record to Avoid an Obligation to Refund Payments
Received from Medicaid for APG Rate Code 1432

23?. Plaintiffs repeat and reallege to 236 as if fully set forth herein.

233. Defendants made and used or caused to be made or used false records or
statements the false certi?cations made or caused to be made by Health Quest and VBMC
in submitting the cost reports to conceal, avoid, or decrease an obligation to pay or transmit
money or property to the United States.

239. Said false records or statements were presented with actual knowledge of their
falsity, or with reckless disregard or deliberate ignorance of whether or not they were false.

240. By virtue of the false records or false statements made by Defendants, the United

States suffered damages and therefore is entitled to recovery as provided by the FCA of an

amount to be determined at trial, plus a civil penalty of $5,500 to $1 1,000 for each violation.

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COUNT XXI
(Defendants Health Quest and VBMC)

New York False Claims Act, N.Y. Fin. Law 189(l)(a), Presenting Claims
to Medicaid for APG Rate Code 1432

241. Plaintiffs repeat and realiege 1W 1 to 240 as if fully set forth herein.

242. From May 2013 through December 2015, Defendants knowingly presented, or
caused to be presented, false and fraudulent claims for payment or approval to the State of New
York for APG Rate Code 1432 when VBMC was not entitled to use that rate code because it did
not own or operate a clinic for primary medical services.

243. Said claims were presented with actual knowledge of their falsity, or with reckless
disregard or deliberate ignorance of whether or not they were false.

244. By virtue of the false or fraudulent claims made and caused to be made by
defendants, the State of New York has suffered damages and therefore is entitled to treble
damages under the NYFCA in an amount to be determined at trial, plus a civil penalty of $6,000
to $12,000 for each violation.

was
(Defendants Health Quest and VBMC)

New York False iaims Act, N.Y. Fin. Law 189(1)(h), Making or Using False
Records or Statements to Cause Claims to Be Paid
By Medicaid for APG Rate Code 1432
245. Plaintiffs repeat and to 244 as if fully set forth herein.
246. Defendants knowingly with actual knowledge, in deliberate ignorance of the

truth, or with reckless disregard of the truth] made or used, or caused to be made or used, false

records or statements including but not limited to the false certi?cations and representations

made and caused to be made by Health Quest and VBMC, that the services were provided in

 

Case Document 1 Filed 01/21/16 Page 50 of 52

compliance with all laws regarding the provision of health care services to get false or
fraudulent claims paid or approved by the State of New York.

24?. By virtue of the false records or statements made and caused to be made by
Defendants, the State of New York has suffered damages and therefore is entitled to treble
damages under the NYFCA, in an amount to be determined at trial, plus a civil penalty of $6,000
to $12,000 for each violation.

COUNT 
(Defendants Health Quest and VBMC)

New York False Claims Act, N.Y. Fin. Law 189(l)(c), Conspiring to
Submit False Claims to Med ieaid for APG Rate Code 1432

248. Plaintiffs repeat and reallege 1 to 247 as if fully set forth herein.

249. Defendants conspired to defraud the State of New York by getting a false or
fraudulent claim paid by Medicaid.

250. By virtue of the conspiracy to defraud the State ofNevv York, the State of New
York suffered damages and therefore is entitled to treble damages under the NYFCA, in an
amount to be determined at trial, plus a civil penalty of $6,000 to $12,000 for each violation.

COUNT XXIV
(Defendants Health Quest and VBMC)

New York False Claims Act, N.Y. Fin. Law 189(1)(h), False Record to Avoid an
Obligation to Refund Payments Received from Medicaid for APG Rate Code 1432

251. Plaintiffs repeat and reallege ll 1 to 250 as if fully set forth herein.

252. Defendants made and used or caused to be made or used false records or
statements the false certi?cations made or caused to be made by Health Quest and VBMC
in submitting the cost reports to conceal, avoid, or decrease an obligation to pay or transmit

money or property to the State of New York.

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253. Said false records or statements were presented with actual knowledge of their
falsity, or with reckless disregard or deliberate ignorance of whether or not they were false.

254. By virtue of the false records or false statements made by Defendants, the State of
New York suffered damages and therefore is entitled to recovery as provided by the NYFCA of
an amount to be determined at trial, plus a civil penalty of $6,000 to [2,000 for each violation.

PRAYER FOR RELIEF

WHEREFORE, the Relator, on behalf of the United States and the State of New York,
demands and prays thatjudgment be entered in its favor against Defendants, jointly and
severally, as follows:

1. On the Counts under the False Claims Act treble the amount of damages sustained
by the United States and civil penalties for each false claim or false statement, as provided by
law; and

2. 0n the Counts under the NYFCA treble the amount of damages sustained by the
State of New York and civil penalties for each false claim or false statement, as provided by law;
and

3. For all Causes of Action alleged herein by Relator, all expenses and attorneys?
fees related to this legal action, as provided by law; and

4. Any other equitable relief this Court deems just and proper.

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DEMAND FOR JURY TRIAL
Pursuant to Rule 33 of the Federal Rules of Civil Procedure, Relator Timothy Cleary
hereby demands a trial by jury.

Dated: White Plains, New York
January 21, 2016

By: 4 
fK'athy S/Marks
140 Grand Street, Suite 501
White Plains, New York 10601
Tel: (914) 686?1500

52