October 27, 2014 / 8:36 PM / 5 years ago

UPDATE 3-U.S. sues NYC, Computer Sciences for alleged Medicaid fraud

(Adds Computer Sciences response to lawsuit)

By Jonathan Stempel and Nate Raymond

NEW YORK, Oct 27 (Reuters) - The United States on Monday sued New York City and Computer Sciences Corp, accusing them of defrauding Medicaid into making millions of dollars of improper reimbursements by exploiting a computerized billing system that the company designed.

According to a complaint filed in U.S. District Court in Manhattan, the defendants took advantage of the system’s automatic default settings, enabling the city to improperly boost the amount and speed of reimbursements for services provided to infants and toddlers with developmental delays.

U.S. Attorney Preet Bharara in Manhattan said some of these services might have been covered by private insurance, while others should not have been billed to Medicaid at all. He said the fraud led to the city and Computer Sciences submitting tens of thousands of false claims to Medicaid from 2008 to 2012.

“CSC and the city created computer programs that systematically, and fraudulently, altered billing data in order to get paid by Medicaid as quickly as possible and as much as possible,” Bharara said in a statement. “Billing frauds like those alleged undermine the integrity of public healthcare programs like Medicaid.”

Originally filed by a whistleblower, Vincent Forcier, the lawsuit seeks restitution, civil penalties and triple damages under the federal False Claims Act.

That law lets whistleblowers sue on the government’s behalf and share in recoveries. The government sometimes intervenes in cases it considers stronger.

Richard Adamonis, a Computer Sciences spokesman, said the Falls Church, Virginia-based company believes the lawsuit is without merit and sees no basis to support “virtually all” allegations it learned about during the two years it worked with Bharara’s office. He also said Computer Sciences is “confident” that it did not submit false Medicaid claims for the city.

Nick Paolucci, a spokesman for New York City’s Law Department, said: “The city has cooperated fully with the U.S. Attorney’s investigation, but we strongly disagree with the allegations, which we believe involve technical billing issues, not fraud. The Health Department acted appropriately and all services billed were authorized and provided.”

New York state plans to bring a related case against Computer Sciences, court records show. A spokeswoman for state Attorney General Eric Schneiderman declined to comment.

The lawsuit concerns early intervention program services, which are provided to children under 3 years old who have developmental delays, or medical conditions such as autism and low birth weight that are associated with such delays.

According to the federal government, the city and Computer Sciences engaged in three fraud schemes.

In two, the defendants allegedly circumvented Medicaid’s “secondary payor” requirement that they exhaust private insurance coverage before submitting claims.

The third allegedly involved the defendants’ changing diagnostic codes used by medical providers to a generic code that they knew would result in payment by Medicaid.

Forcier, the whistleblower, could not immediately be reached.

The case is U.S. ex rel. Forcier v. Computer Sciences Corp et al, U.S. District Court, Southern District of New York, No. 12-01750. (Reporting by Jonathan Stempel in New York and Nate Raymond in Washington, D.C.; Editing by Meredith Mazzilli, Leslie Adler and Ken Wills)

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