Oversight Probes Potential Interference from Govs. Rendell, Cuomo in New York Medicaid Audits

WASHINGTON – Leaders on the House Oversight and Government Reform Committee are seeking more information from two health care groups that may have received preferential treatment from the New York’s Medicaid Inspector General after prominent political allies, including former Pennsylvania Governor Ed Rendell, exerted influence. Letter sent to both groups were signed by Chairman Darrell Issa, R-Calif., Subcommittee Chairman James Lankford, R-Okla., and Subcommittee Jim Jordan, R-Ohio and are part of the Committee’s ongoing oversight of New York State’s Medicaid program.

The first letter, sent to Town Total Nutrition, Inc. Owner John Navarra, cites whistleblower allegations that the findings of inappropriate payments were dramatically reduced over the course of the Inspector General’s audit of the group, from more than $12 million to a final settlement of $531,291.

“Several whistleblowers indicated that the large reduction in OMIG’s findings of Medicaid overpayments received by Town Total possibly resulted from your powerful political influence,” the letter states. “For example, the Committee has learned that former Pennsylvania Governor and former Democratic National Committee Chairman Ed Rendell intervened on your behalf during the period Town Total was being audited.  According to James G. Sheehan, former OMIG Inspector General, Rendell called him in an apparent attempt to obtain favorable treatment from OMIG for Town Total.”

The second letter was sent to John McDonald III, Vice President of Marra’s Pharmacy. “Documents produced to the Committee by OMIG confirm that there were dramatic reductions in the amount of findings of Medicaid overpayments received by Marra’s Pharmacy,” according to the letter.

The letter continues, “Two days after that final audit was issued, Barbara J. McDonald, your mother and president of Marra’s Pharmacy, wrote Governor Cuomo in an attempt to have him intervene in your dispute with OMIG…. After your mother’s letter to Governor [Andrew] Cuomo, OMIG further reduced the findings of Medicaid overpayments received by Marra’s Pharmacy to $566,739with an offer to settle the overpayments for only $268,038.28.”

“The available information suggests your company got away with inappropriately billing the Medicaid program by millions of dollars because of your powerful political connections,” the Chairmen conclude.

Earlier this week, the Committee sent two letters to Visiting Nurses Service raising several issues, including a possible connection between Governor Cuomo’s appointment of then-VNS President and CEO as a Co-chair of New York’s Medicaid Redesign Team in early 2011 and the large reduction in OMIG’s findings of wrongdoing by VNS.  You can read the letters here and here.