AG recovers $6.2 million in Medicaid fraud

The state attorney general’s Medicaid fraud unit recovered $6.2 million during the 2016 federal budget year as a result of investigations into health care providers and others cheating the program for low-income people.

The $6.2 million represented a sharp increase from the $352,000 recovered by the Attorney General’s Office in the previous budget year in criminal and civil cases of Medicaid fraud, according to data from the U.S. Department of Health and Human Services.

“Medicaid fraud pulls precious resources away from our state’s most vulnerable citizens, and my office will continue to root out fraud and hold the perpetrators accountable,” Attorney General Hector Balderas said in a news release.

James Hallinan, a spokesman for the Attorney General’s Office, said he couldn’t immediately provide the names of the agencies or individuals that paid the $6.2 million.

“Some of the recoveries have confidentiality clauses attached to them due to national litigation, so our Medicaid fraud folks need to check each case file before we can respond to your request,” Hallinan said.

In the year it recovered the $6.2 million in Medicaid fraud payments, the attorney general’s fraud unit received $2.1 million in federal funding, meaning it recovered about $3 for every $1 spent.

Congress expanded the authority of state and federal agencies to root out Medicaid fraud when it passed the Affordable Care Act in 2010.

But many health care providers say efforts to recover money defrauded from the program have become too aggressive and that botched prosecutions can do lasting damage to a state’s health care network.

A 2015 news release announced the Attorney General’s Office was charging the Carlsbad Mental Health Center and four of its executives with eight counts of Medicaid fraud and one count of fraud involving non-Medicaid funds.

“We will aggressively defend victims of fraud and abuse by prosecuting providers who violate the public trust,” Balderas said in the news release.

But a judge later determined that probable cause did not exist to bind three of the executives over for trial, said Kenneth Dugan, the company’s attorney on the case.

Charges against the corporation and one of its executives were dismissed after an agreement was reached with the Attorney General’s Office in January, Dugan said. No guilt was admitted in the case, he added.

Hallinan said Carlsbad Mental Health Center paid $300,000 to the state “in resolution of the issues involved in all cases” against it and its executives prior to trial.

Dugan said the only reason the executive and company

board entered into the agreement was so it could transfer its building and other assets to “charitable organizations that meet the goals of bettering the mental health of Carlsbad.”

Gov. Susana Martinez’s administration in 2013 said an audit by a Boston company found that 15 of the state’s largest behavioral health providers may have overbilled or defrauded Medicaid by $36 million in a three-year period.

New Mexico shut most of the providers pending criminal probes and installed five Arizona companies to take over their services.

Many of the 15 providers remain closed, and the state Human Services Department continues to argue that the firms owe tens of thousands in overbilled Medicaid charges. Ten of the providers are part of a lawsuit accusing the state of violating their due-process rights by not giving them a chance to respond to the allegations of Medicaid overbilling.

The Attorney General’s Office eventually cleared all 15 providers of criminal wrongdoing, but the state ended up collecting $4 million in a settlement with one of the companies.

The Attorney General’s Office said it would have been able to keep additional money from Medicaid fraud recovery under a bill that died in the recent session of the Legislature.

The bill would have given the Attorney General’s Office authority to also investigate violations of the Medicaid False Claims Act.

Currently, only the state Human Services Department has the authority to investigate violations of the state law.

Hallinan said that because the office didn’t have the investigation authority, it had to turn over to the federal government $600,000, or 10 percent, of the $6.2 million recovered in the 2016 budget year.