The United States has reached a settlement with Community Options, Inc. (COI) and Community Options New York, Inc. (CONY), resolving allegations of fraudulent billing practices under the False Claims Act. The Acting U.S. Attorney for the Southern District of New York, Matthew Podolsky, along with Naomi Gruchacz from the Department of Health and Human Services' Office of Inspector General (HHS-OIG), announced the $5 million settlement.
Community Options operates programs for adults with developmental disabilities in New York and is accused of submitting improper claims to Medicaid for Day Habilitation services that did not meet state requirements. These services are designed to help individuals improve their independence and daily living skills.
The settlement includes payments of over $2 million to the U.S. government and nearly $3 million to the State of New York. The agreement also requires Community Options to adhere to a Corporate Integrity Agreement with HHS-OIG, which mandates compliance programs and independent reviews of Medicaid claims.
"Community Options billed Medicaid for services that failed to meet program requirements," said Acting U.S. Attorney Matthew Podolsky. "This Office will continue to ensure that our most vulnerable New Yorkers receive the services they deserve."
Naomi Gruchacz added, "Individuals and entities that participate in the federal healthcare system are required to obey the laws meant to preserve the integrity of program funds."
The lawsuit alleged that between January 2017 and September 2024, COI did not maintain adequate policies or training related to Day Habilitation services as required by New York State's Office for People With Developmental Disabilities (OPWDD). Despite this, COI submitted claims for reimbursement without meeting these standards.
The Government joined a private whistleblower lawsuit filed under seal pursuant to the False Claims Act as part of this case resolution.
Assistant U.S. Attorney David E. Farber is handling the case through the Civil Frauds Unit, with investigative support from HHS-OIG and collaboration from New York's Medicaid Fraud Control Unit.
