Healthfirst largest health plan for Medicaid beneficiaries pay $35 million FRAUD

Health plan settles fraud charges with state
A related indictment accuses a former Healthfirst executive of concealing a practice of paying employees based on productivity, which is prohibited to protect consumers from aggressive sales tactics.

Healthfirst, New York state’s largest health plan for Medicaid beneficiaries, agreed to pay $35 million to settle charges by the attorney general that it had submitted false marketing plans.

A former senior executive of Healthfirst was also indicted earlier this year on related charges, the attorney general’s office said.

Last November, the state Department of Health temporarily shut down enrollment in all but Healthfirst’s Medicare plans after the attorney general’s investigation was revealed. The company, which has about $1 billion in annual premium revenues, provides coverage for about 500,000 people in New York and New Jersey.

In the wake of the shutdown, which ended in March, Healthfirst’s chief executive and founder, Paul Dickstein, and chief operating officer James Boothe stepped down.

It was Mr. Boothe who was indicted in May for first degree insurance fraud, a felony.

The indictment alleges that Mr. Boothe caused Healthfirst to submit false marketing plans to the state and to local government agencies, and concealed the information that Healthfirst paid its marketing representatives based on their productivity, which is prohibited. According to the indictment, the payment plan violated the company’s contract with the state from 1999 through 2003. Healthfirst management reported the violations to the state, and the company cooperated with the attorney general’s investigation.

The rules governing the marketing of Medicaid plans are designed to protect people from aggressive sales tactics.

In January, Patricia Wang, then a senior vice president at Greater New York Hospital Association, was named Mr. Dickstein’s successor.

“None of the conduct involved relates to current practices of Healthfirst, and the company is in complete compliance with all relevant regulatory requirements,” said a spokesman for Healthfirst, whose owners include Beth Israel Medical Center, Mount Sinai Medical Center and The New York City Health and Hospitals Corp.