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Upper Allegany Health System To Pay $2.7 Million To Settle False Claims Act Allegations


Michael T. Baldwin Reports

BUFFALO, N.Y. – U.S. Attorney James P. Kennedy, Jr. announced today that Upper Allegheny Health System (UAHS), a health care system which operates several dental clinics in the Southern Tier of New York and in Pennsylvania, has agreed to pay $2.7 million dollars to resolve False Claim Act allegations. Under the settlement, the federal government will receive approximately $1.3 million dollars. 

Assistant U.S. Attorney MaryEllen Kresse, who handled the case for the U.S. Attorney’s Office in Buffalo, stated that between April 1, 2010, and May 31, 2015, UAHS submitted false claims to Medicaid for dental services that were performed using handpieces which had not been appropriately sterilized. Dental handpieces are considered semi-critical devices and are therefore required to be heat sterilized between each patient use.  UAHS failed to purchase sufficient dental hand pieces to allow for such heat sterilization. Instead, UAHS directed personnel to use CaviWipes to “clean” handpieces between patients. The government alleged that billing Medicaid for services provided using unsterilized dental handpieces violates the Federal False Claims Act as well as the New York False Claims Act.

“It is inconceivable that a healthcare business would seek to cut corners when it comes to the appropriate cleaning and sterilization of medical devices,” noted U.S. Attorney Kennedy. “This settlement under the False Claims Act holds Upper Allegheny accountable for the risks created for patients in the past, while ensuring that in the future patient safety will be preserved and that taxpayers will only pay for services which are properly provided.”

This settlement was reached by the U.S. Attorney’s Office for the Western District of New York, in conjunction with the U.S. Attorney’s Office for the Western District of Pennsylvania, and the New York State Attorney General’s Office, Medicaid Fraud Control Unit (MFCU).

The case against UAHS was brought in federal court by a whistleblower who alleged the health system violated the federal False Claims Act and the New York False Claims Act by improperly billing health care programs. Under the federal False Claims Act, private citizens are permitted to bring lawsuits known as qui tams on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.

New York’s Medicaid program provides medical insurance to groups of low-income people and individuals with disabilities. Medicaid is a nationwide program jointly funded by the federal government and states. Medicaid eligibility, benefits, and administration are managed by states within federal guidelines.

The claims resolved by this settlement are allegations only, and there have been no determinations of liability. 

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