Brooklyn-Based Home Health Care Agencies Settle Fraud Claims for $9.75 Million and Agree to Pay $7.5 Million in Wages and Benefits to Underpaid Aides

Breon Peace, United States Attorney for the Eastern District of New York, and Letitia James, New York State Attorney General, announced settlement agreements with Brooklyn-based licensed home care service agencies (LHCSAs) Edison Home Health Care of New York LLC (Edison) and Preferred Home Health Care of New York LLC (Preferred) today. The settlement agreements address allegations that Edison and Preferred, which were related companies, violated the federal False Claims Act and New York State’s False Claims Act in claiming that they paid their home care aides the minimum wages required under New York State law. The agencies received payments from Medicaid, which is funded in part by the federal government, and much of that money was meant to pay the wages and benefits of their aides.

Today’s settlement with Edison and Preferred follows similar settlements with the LHCSAs All American Homecare Agency, Crown of Life Care NY LLC, and White Glove Community Care, Inc.

“Home health aides work long hours at difficult, often thankless tasks to ensure that the vulnerable individuals who they provide services to are properly cared for,” stated United States Attorney Peace. “These aides deserve the hard-earned benefits guaranteed them under the law and my Office will ensure that they are accurately compensated.”

Mr. Peace thanked the Medicaid Fraud Control Unit of the Office of the New York State Attorney General for its partnership in the government’s investigation and resolution of this important case.

“Home health aides provide crucial care to our most vulnerable neighbors and loved ones, and they deserve to be paid for their hard work,” said Attorney General James. “Edison and Preferred cheated employees out of years of pay and cheated New York taxpayers by defrauding Medicaid for their own benefit. This is a tremendous victory for our ongoing efforts to protect hardworking New Yorkers’ rightfully earned wages. My office will do everything in our power to ensure that companies cannot steal wages and take advantage of the system. Thank you to U.S. Attorney Breon Peace for his continued partnership in rooting out Medicaid fraud.”

The New York Wage Parity Act sets minimum wage and benefits requirements for LHCSAs that employ home care aides who render services to Medicaid recipients in New York City and in Nassau, Suffolk, and Westchester counties. Under the Wage Parity law, aides are to be paid a minimum amount in total compensation; only then will the LHCSAs receive Medicaid reimbursement for home care services. The required compensation comes in the form of a base wage and a supplemental benefit. The base wage must be paid in cash. The benefit portion can include the value of vacation, holiday, and sick pay, among other things. It can also include health insurance, pension plans, or educational assistance. Today, the minimum amount of total compensation for an aide in New York City is $19.09 per hour; for Nassau, Suffolk, and Westchester counties, the minimum is $18.22 per hour.

Home health aides perform all aspects of personal care for sick or homebound patients and frequently work long shifts lasting up to 24 hours. The tasks performed in caring for patients are demanding and can consist of assisting or lifting patients out of bed and bathing, dressing, grooming, preparing meals for and, in some instances, feeding them. Patients may suffer from physical or mental disorders that can make the work of the aides physically and emotionally taxing. In fact, it was in recognition of the difficulty of this work that New York passed the Wage Parity Act.

The Settlement

This Office, in coordination with the New York State Attorney General’s Office’s Medicaid Fraud Control Unit, commenced an investigation after whistleblowers alleged that certain LHCSAs had knowingly defrauded the federal government and New York State by underpaying home health aides in violation of the Wage Parity Act. The government’s investigation determined that Edison and Preferred certified their compliance with the law and sought and received reimbursement from Medicaid, even though the government determined that their payments to their aides fell short of the requisite compensation.

Under the terms of the agreements with the United States and New York State, Edison and Preferred have agreed to pay $3.9 million to the United States and $5.85 million to New York State for conduct that took place from 2012 to 2022.

In addition to the payments to resolve the government’s fraud claims, Edison and Preferred are required to pay $7.5 million to current and former aides who were and are entitled to compensation under the Wage Parity Act. Moreover, Edison and Preferred have admitted to conduct that led the government to determine that they fell short of Wage Parity Act requirements.

The case is being handled by Assistant U.S. Attorney Michael Blume of the Office’s Civil Division.