Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has filed a lawsuit against PARK AVENUE MEDICAL ASSOCIATES (“PAMA”) and PARK AVENUE MEDICAL ASSOCIATES, P.C. (“PAMA PC”), and related entities, alleging that they billed Medicare for services purportedly provided to elderly, mentally ill patients that were not medically necessary, were not documented in the medical record, and/or failed otherwise to comply with Medicare rules and regulations. The Government’s Complaint alleges that, as a consequence of the conduct of PAMA and PAMA PC, the entity that allegedly submitted claims to Medicare on behalf of PAMA, Medicare paid the defendants for thousands of claims that were not eligible for payment, resulting in over $1 million in damages.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Park Avenue Medical Associates inundated Medicare with bogus claims, including bills for unnecessary psychiatric services for vulnerable elderly patients, who did not have the ability to benefit from the services. We will continue our efforts to protect this taxpayer-funded program and the people who rely on it for care from fraud and abuse.”
According to the Complaint filed today in Manhattan federal court:
PAMA directly employs physicians, nurses, and other medical professionals who provide services to elderly patients at hospitals, including inpatient psychiatric facilities, nursing homes, assisted living facilities, and other types of long-term care facilities. The patients and residents at these facilities suffer from various chronic health conditions, including Alzheimer’s disease, dementia, schizophrenia, psychosis, depression, and anxiety. The doctors and nurses employed by PAMA receive a salary from PAMA, which contracts with the facilities. In addition to their regular salaries, psychiatrists and psychologists employed by PAMA receive bonuses based on how many services they provide and the level of reimbursement they generate for PAMA from government and other insurance providers, including Medicare.
Medicare prohibits payment for services that are not reasonable and necessary for the diagnosis or treatment of an illness or injury. Medicare also prohibits payment for any claim without adequate documentation substantiating the reasonableness and necessity of the services provided. In particular, Medicare does not cover psychotherapy services rendered to patients with Alzheimer’s disease or dementia unless the patient’s dementia is mild, the patient has the capacity to recall what occurred at the therapy from one session to the next, and that capacity is documented in the patient’s record. Psychotherapy services are not covered when dementia has produced a severe enough cognitive deficit to prevent them from being effective. In addition, Medicare provides that psychiatric diagnostic examinations are generally covered only once for each episode of illness or suspected illness in a patient and must be medically necessary.
In violation of Medicare policies, as well as its own policies, PAMA provided psychotherapy to patients who lacked the capacity to benefit from it due to severe dementia. In addition, PAMA PC billed for psychiatric evaluations that were duplicative, failed to comply with Medicare rules, and reflected a lack of coordination of care both among PAMA’s own psychiatrists, psychologists and nurses, and between PAMA’s employees and staff at the facilities with which PAMA contracted to provide services. Moreover, PAMA PC billed for services for which it lacked any documentation whatsoever. PAMA PC billed Medicare for a far larger number of services per psychiatrist and psychologist during the period 2001 through 2012 than any other provider with a similar patient population in the New York area.
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