TRENTON
- Attorney General Peter C. Harvey announced
that the former Chief Financial Officer
at the Mt. Carmel Guild Hospital in Essex
County has pleaded guilty to submitting
fraudulent Medicaid “cost reports”
to the federal and state Medicaid Program.
As a result of the fraudulent reports,
Medicaid overpaid the hospital nearly
$40 million over a five-year period. The
Medicaid Program, which is funded by state
and federal governments, provides health
care services and prescription drugs to
persons who may not otherwise be able
to afford such services and medicines.
According to Vaughn L. McKoy, Director,
Division of Criminal Justice, and Greta
Gooden Brown, Insurance Fraud Prosecutor,
John Cardillo, 48, Garfield Street, Berkeley
Heights, Union County, pleaded guilty
before Essex County Superior Court Judge
Michael Casale to a criminal Accusation
which charged Health Care Claims Fraud.
The guilty plea was entered before Judge
Casale on July 13. Cardillo faces up to
five years in state prison and a fine
of up to $15,000 when sentenced on Dec.
2.
Insurance Fraud Prosecutor Brown said
that Cardillo, formerly employed as the
Chief Financial Officer for Mt. Carmel
Guild Hospital, 1160 Raymond Boulevard,
Newark, admitted that he knowingly submitted
false Medicaid “cost reports”
to the Medicaid Program from May, 1999
to April, 2003.
Brown noted that hospitals and nursing
homes employ a “cost report”
accounting system to determine payments
due from Medicaid. “Cost report”
accounting considers Medicaid’s
proportion of the health care facility’s
population and pays that percentage of
the facility’s total costs based
on the number of Medicaid patients the
hospital treats.
Typically,
hospitals report the number of Medicaid
patients treated over a given period of
time to the Division of Medical Assistance
and Health Services which reimburses the
hospital for provided Medicaid health
services. Accurate “cost report”
requires both an accurate accounting of
costs incurred by the hospital and an
accurate accounting of charges made to
patients. If costs are inflated or modified,
Medicaid pays a higher percentage of hospital
expenses. The Accusation charged that
Cardillo modified both the total costs
and Medicaid’s percentage of the
total charges submitted in the hospital’s
“cost reports.”
The investigation was conducted by the
Division of Criminal Justice - Office
of the Insurance Fraud Prosecutor’s
Medicaid Fraud Section which investigates
and prosecutes civil and criminal Medicaid
fraud cases. State Investigator Robert
McGrath and Deputy Attorney General Erik
W. Daab were assigned to the investigation.
James Harris of the Division of Medicaid
Assistance and Health Services assisted
in the investigation.
“Investigations
targeting fraudulent and inflated cost
report theft from the Medicaid Program
requires a complex and time-consuming
financial investigation,” said Insurance
Fraud Prosecutor Brown. “These types
of financial crimes must be aggressively
investigated because such schemes not
only involve theft of tax dollars, but
also represent a theft from a program
designed to assist persons who can not
afford health insurance or health care
services. Such cases are a priority for
the Office of the Insurance Fraud Prosecutor.”
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