New York – Presbyterian Hudson Valley Hospital has agreed to pay $6.5 million to the federal government, including $616,000 for New York State, for participating in a kickback scheme that was exposed by the Cortlandt Manor hospital’s former chief financial officer.
The hospital kicked back $4.1 million in Medicare and Medicaid payments to a Westchester oncology practice that referred 114 cancer patients to the hospital, according to a settlement endorsed on Dec. 18 by U.S. District Judge Nelson S. Roman, in White Plains.
In 2021, several years after Kevin G. Murphy left as chief financial officer, he filed a whistleblower lawsuit alleging that the hospital “improperly paid millions of dollars to a Westchester-based oncology practice, often with no justification.”
The state’s Medicaid Fraud Control Unit, under Attorney General Letitia James, and the U.S. Attorney’s office investigated the alleged violations of state and federal False Claims Acts and an anti-kickback statute.
The scheme began in 2010 when the facility was known as Hudson Valley Hospital Center, continued in 2015 when New York – Presbyterian began acquiring the hospital, and lasted through 2019.
The hospital wanted to expand its oncology department, according to the settlement, and made deals with an outside oncology practice to move its business to the hospital. Physicians from the oncology practice would serve as medical directors of a proposed melanoma cancer center and a breast cancer center. The oncology practice would also manage and market a radiation therapy service.
The hospital agreed to pay nearly $500,000 a year for the services.
In 2011, the Cheryl R. Lindenbaum Comprehensive Cancer Center opened, according to news accounts, and included “renowned surgeons of the Ashikari Breast Center.”
But according to the settlement agreement, the oncology practice, which is not identified, was not doing most of the work it was supposed to do. The melanoma cancer center, for instance, was never established as envisioned.
By October 2016, nearly two year after the hospital was acquired, New York – Presbyterian knew, or should have known, that work was not being done. Yet, even after the original deals expired, the hospital continued to pay hundreds of thousands of dollars a year to the oncology practice.
Murphy, who served as chief financial officer from mid-2015 to late 2017, will receive $73,471 for exposing the scheme.
Though the oncology group and physicians who participated in the scheme are not identified, New York – Presbyterian is required to fully cooperate with investigations of any entities or individuals who are not covered by the settlement.
