The federal government has demonstrated that it is more than willing to use the United States criminal code to prosecute home care agencies that pay unlawful financial inducements to generate referrals in violation of the Anti-Kickback Statute (AKS).
In a superseding indictment unsealed in March 2025, the United States Attorney’s Office for the Eastern District of New York charged 13 defendants with conspiracy, health care fraud and kickback violations arising from a bribery scheme that fraudulently induced Medicaid payments of approximately $68 million for social adult day care services and personal care services under the Consumer Directed Personal Assistance Program (CDPAP).[1]
The defendants charged in the indictment include the owners of two Brooklyn-based social adult day care centers, Happy Family Social Adult Day Care, Inc., and Family Social Adult Day Care, Inc., and a fiscal intermediary, Responsible Care Staffing, Inc., together with a number of marketers and Medicaid beneficiaries. The indictment charges the owners with paying bribes and kickbacks to the marketers, who referred Medicaid beneficiaries back to the owners’ businesses. The marketers allegedly paid bribes and kickbacks to the beneficiaries for social adult day care and CDPAP services that were billed by the owners to Medicaid Managed Long Term Care Plans, but which either were not provided or were induced through the unlawful payments that were being funded by the fraud proceeds.
Most of the Medicaid recipients who received the money did not receive any services on the alleged dates of service and, in some cases, were not even in the United States at the time the services allegedly were rendered. In announcing the original indictment, federal and state law enforcement officials declared their unwavering commitment to investigate and prosecute those who would “plunder” and “brazenly steal” millions of dollars from Federal Health Care Programs that were intended to fund “vital programs for senior citizens.” At least two of the charged defendants already have pleaded guilty.
This prosecution, which is currently pending before United States District Judge Natasha C. Merle, is evidence that the Federal government will not hesitate to expend enforcement resources to protect Medicaid-funded home care programs like CDPAP. That said, it would be a serious mistake to assume that the Federal government will only be moved to act when the alleged conduct is severe enough, or the evidence strong enough, to warrant criminal prosecution. The government has other tools at its disposal that can be brought to bear against agencies that are engaged in questionable financial arrangements with referral sources. The Civil Monetary Penalties Law (authorizing civil monetary penalties for AKS violations), the Exclusion Statute (authorizing the exclusion of providers from the Medicare and Medicaid programs for AKS violations) and the False Claims Act (authorizing treble damages and civil monetary penalties for false claims resulting from AKS violations) are all available to use against agencies that are generating Medicaid claims in violation of the AKS.
Home care agencies and fiscal intermediaries would be well-advised to carefully review all their compensation arrangements with potential referral sources to ensure they are compliant and cannot reasonably be construed as unlawful financial inducements designed to generate claims under CDPAP or another Medicaid-funded home care program. Legal counsel knowledgeable in the AKS and factors guiding federal enforcement discretion under that statute can assist in providing privileged advice around such a review.
A copy of the indictment can be found here.
[1] United States v. Zakia Khan, et al. (Cr. No. 24-409 S1 (NCM)
