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July 22, 2009 - NYC, State Pay $540 Million in Medicaid Case

New York state and New York City agreed to pay a record $540 million to settle allegations they filed false Medicaid claims, the U.S. Justice Department said.

State and local officials allegedly submitted claims for reimbursement for school-based healthcare services provided to Medicaid-eligible children from 1990 to 2001, the Justice Department said Tuesday in a news release.

The settlement is a record federal recovery for the Medicaid program, Justice Department officials said.

The settlement resolves allegations that the state of New York knowingly failed to provide proper advice on requirements for a service to be eligible for coverage by the Medicaid program and failed to monitor districts and counties for compliance as required, among other things.

In addition, the settlement resolves allegations that the city of New York submitted claims to the state for speech services. The state then sent the claims to the federal government for Medicaid reimbursement.

The state will pay $440 million over time, part in cash and part by releasing its claim to payments withheld. New York City's share of the settlement, $100 million, will also be paid over time.

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