Cutting off the Lifeline

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Drug rehabilitation centers are a lifeline for people who want to beat addiction issues. (They usually provide detox assistance, inpatient rehab, medication-assisted treatment, support groups and counseling to help them overcome their dependence on drugs.) A now defunct Bronx, New York-based rehab chain, Narco Freedom, used Medicaid as a lifeline to fund lavish lifestyles for the organization’s executives and steal millions of dollars from the government healthcare program. Today’s fraudster, an Oyster Bay man, is the latest to be convicted for the part he played in the multi-million dollar Medicaid fraud scheme.

The New York City (NYC) chain of drug and alcohol rehabilitation clinics built up their customer base by sending employees into jails, prisons and detox programs to promote the non-profit’s in-house treatment facilities. Through Narco Freedom’s program, clientele received a bed if they participated in the organization’s treatment program. (Apparently, there were approximately 1,500 people living in 21 “Freedom Houses” across NYC.)

But what residents actually received was a bit different from what they were promised. (Vermin, bed bugs, leaky ceilings, the open use of drugs, and overdoses just to name a few.) Residents paid approximately $215 per month in state funding for a bunk in a room with eight or more people and Medicaid picked up the tab for each counseling session they were required to attend at $84 a pop. (Sadly, when the government healthcare coverage ran out, the patients were illegally evicted.)

While the residents were living in subpar conditions under the guise of drug addiction treatment, the non-profit’s executives were living the high life, funded by false claim submissions to Medicaid.  (Some of the top dogs at the rehab chain billed excessively for services, operated an unregulated treatment program and coerced patients living at their facilities to continue with treatment for their addictions.)

Today’s fraudster is a 63-year-old man, who colluded with the corrupt managers of Narco Freedom to receive half a million dollars in salary and benefits over five years. (There was just one problem – the job didn’t exist.) The dishonest man used the $500,000 on health insurance, retirement benefits, and to lease a Land Rover. He collected another $300,000 by setting up a shell company and submitting bogus invoices to Narco Freedom for services it did not provide. (Then Narco Freedom paid the invoices with Medicaid money.)

The ‘no-show’ executive was convicted of Medicaid fraud for colluding with the non-profit that provided substance abuse services throughout NYC. He was sentenced to state prison for two to six years and was ordered to pay $840,000 to the New York State Medicaid Fraud Restitution Fund.

Congratulations to the New York Medicaid Fraud Control Unit for cutting off this lifeline that led to the exploitation of vulnerable people who needed the drug rehab organization’s help. The successful prosecution and conviction of a dozen individuals who were involved in the scam and the approval of a $118 million settlement to rectify the nonprofit’s outstanding government claims means that another lifeline has been extended to those who can now legitimately receive the care and support they need to kick their addiction problems.

Today’s “Fraud of the Day” is based on an article entitled, Oyster Bay Man Gets Prison Time for “No-Show’ Medicaid-Funded Job,” published by Oyster Bay Patch on March 23, 2018.

An Oyster Bay man was sentenced to prison on Friday for stealing approximately $840,000 from Medicaid by colluding with a nonprofit that provided substance abuse services throughout New York City, according to Attorney General Eric T. Schneiderman.

John Cornachio, 63, was sentenced to state prison for 2 to 6 years and ordered to pay $840,000 in restitution to the New York State Medicaid Fraud Restitution Fund after he was convicted of second-degree grand larceny.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.