After 14 Years, Elder Law Professor Prevails in Nursing Home Fraud Case

A class action filed 14 years ago by an elder law professor on behalf of thousands of New York nursing home residents who were defrauded by a state program has resulted in an $11 million settlement.

On December 28, 2006, the U.S. District Court for the Western District of New York approved creation of an $11 million fund as settlement of Conrad v. Perales, 92 F.Supp.2d 175 (W.D.N.Y. 2000), a suit begun in 1992 by University at Buffalo Law School professor Anthony Szczygiel on behalf of as many as 20,000 nursing home residents who were defrauded by having to pay Medicaid co-pays even though they were eligible for Medicare.

"[T]he author of the fraud was a state program that (allowed for) the double billing and collection of funds of poor people," said lawyer Henry Killeen III of Killeen & Killeen, lead litigation counsel for the plaintiffs.

Killeen was referring to the Medicare Optimization Program (MOP II), created by the New York Department of Health in 1989. The program required nursing homes to bill both Medicaid and Medicare on behalf of residents. The homes ended up keeping the proceeds from whichever program paid higher benefits and sent the remaining benefits to the state. The problem is that federal law requires nursing homes to accept Medicare reimbursement in full satisfaction of covered services. Because Medicaid was being billed instead, nursing home residents whose care should have been covered in full by Medicare paid additional Medicaid co-pays.

Szczygiel, who in addition to being head of the university's elder law clinic is an attorney with Legal Services for the Elderly, Disabled or Disadvantaged of Western New York, discovered the double billing and filed suit, complaining that the state was not following federal requirements by making refunds to affected nursing home residents.

Most of the class members are now likely deceased. Reimbursements from the settlement will be determined according to a percentage of the illegally collected co-payments paid by each resident, which range from $100 to $5,000.

The case, Killeen said, has been Szczygiel's "world" for more than a decade. "He's given his professional career to this issue. He's been trying to make this right for a long time. It's been such a monumental effort." Szczygiel was not the only one who sacrificed. Killeen himself, along with his wife, borrowed money and withdrew retirement savings to fund the litigation.

For an article on the settlement in Buffalo Business First, click here.

For more background on the case by the Empire Justice Center, click here.