New York Residential Housing Fraud Halted by False Claims Act Suit

On January 18, 2011, the Young Adult Institute (“YAI”) and five of its current and former officers were ordered to pay $18 million in civil damages to settle a lawsuit brought under the False Claims Act.  YAI is the largest operator of residential facilities and other programs for developmentally disabled individuals in New York State.

According to federal prosecutors, YAI falsely inflated the costs of certain residential facilities in order to allow the company to obtain additional Medicaid reimbursements to which it was not entitled.  The United States Attorney’s Office also alleged that YAI: (1) improperly shifted the costs of certain employees’ salaries and fringe benefits to residential facilities where the employees did not actually work; (2) improperly categorized unlicensed staff members as clinical social workers; and (3) improperly categorized its fundraising staff as administrative employees, all of which allowed YAI to receive inflated Medicaid payments.

Under the settlement, YAI and its current and former officers will pay $7.2 million to the United States, and $11.8 million to the state of New York.

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