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New York Reaches $35 Million Settlement With Managed Care Provider

Senior executive gets indicted

September 5, 2008
The state of New York has reached a $35 million settlement with Healthfirst, the largest Medicaid Managed Care provider in the state.

In addition, Attorney General Andrew M. Cuomo announced that James Boothe, a former senior executive of Healthfirst, was indicted earlier this year.

The investigation by the state's Medicaid Fraud Control Unit centered on Healthfirst's practice from 1999 through 2003 of compensating its marketing representatives based on productivity, in violation of its contracts with state and local government agencies, and the company's false statements to those agencies about its marketing practices.

"This settlement and the corresponding indictment are a clear indication that my office will not tolerate any improper conduct by Medicaid providers, and we will fully prosecute any individuals who violate the law," said Cuomo.

Healthfirst violated its Medicaid managed care contract and paid bonuses or other compensation incentives to its employees based on the number of people Healthfirst enrolled from 1999 to September 2003. At the time, the Medicaid managed care contract prohibited such compensation.

Healthfirst also filed marketing plans with New York City and the New York State Department of Health, as well as local social services districts in Nassau and Suffolk County, which falsely represented that its marketing representatives were compensated based solely on qualitative criteria, when in fact its bonuses and other compensation incentives were based on productivity. By this conduct, Healthfirst violated the integrity of the enrollment process, Cuomo said.

In addition to the civil settlement, in May 2008, the Medicaid Fraud Control Unit obtained an indictment charging James Boothe, the former Executive Vice President and Chief Operating Officer of Healthfirst, with Insurance Fraud in the First Degree, a Class B felony carrying a mandatory minimum prison term of 1-3 years, and a maximum of 8 1/3 to 25 years, Scheme to Defraud in the First Degree, Offering a False Instrument for Filing in the First Degree, and Falsifying Business Records in the First Degree, each of which carries a maximum sentence of four years imprisonment.

The indictment charges that Boothe caused Healthfirst to submit false marketing plans to the State and to local government agencies, concealing the fact that Healthfirst was compensating its marketing representatives based on productivity. Boothe previously resigned his position with Healthfirst.

During the course of the Medicaid Fraud Control Units investigation, Healthfirst cooperated with the Attorney General's Office and disclosed certain matters concerning improper compensation practices and enrollment fraud committed by certain of its former marketing representatives.

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