Nassau University Medical Center Chairman Matthew Bruderman announced the filing of a notice of claims against the State of New York last week, alleging the hospital was defrauded of millions of dollars.
“During the last 23 years, NUMC received approximately $1.08 billion from the federal government in [Disproportionate Share Hospital program] matching funds but did not receive the non-federal shares that the state was required to contribute,” the notice of claim said. “Those non-federal shares total approximately $1.06 billion today”
Notice of Intention to File a Claim is an optional document that may be served upon the defendant in a lawsuit to extend the time period to serve and file a claim according to the New York State Unified Court System. It is not filed with the Clerk of the Court. It is the act of service upon the attorney general.
The claim was filed with the office of the New York State Attorney General on Nov. 19.
The claim alleges that the state breached these two contractual obligations as written in the state Medicaid Plan that began April 1, 2024.
The claim alleged the state violated that “entities transferring intergovernmental transfer amounts are all units of government, and the nonfederal share is derived from state or local tax revenue funded accounts only. The providers keep and retain Medicaid payments.”
The claim also alleges that federal law was violated by New York State by failing to follow through on another promise.
“Providers receive and retain 100% of total Medicaid expenditures claimed by the state and the state does not require any provider to return any portion of such payments to the state, local government entities or any other intermediary organization.” the claim said.
NUMC, Nassau County’s only publicly funded hospital, primarily serves Medicare and Medicaid patients and has a Level 1 Trauma Center and certified Burn Center.
Based in East Meadow, the medical center has been plagued by financial hardships throughout the decade. Hospital officials began raising concerns about NUMC’s viability in 2020 after losing a significant stream of funding through the Delivery System Reform Incentive Payment program.
The future of the hospital is threatened by the center’s decades-long financial problems and the inability of its management, the state, and Nassau County to agree on who will run and where the money is coming from to cover its expenses.
In March, state Health Commissioner James McDonald responded to a letter from Bruderman and interim CEO Megan Ryan requesting a meeting and a restoration of funding by calling for a search for a new president and CEO, a plan to cut deficits and other items.
NuHealth, the public benefit corporation running the center, presented a plan weeks after McDonald’s letter to appeal insurance denials, restrict overtime and raise the price of hospital services for the first time in over a decade.
McDonald characterized NuHealth’s plan as “insufficient.” He argued the hospital was lacking a detailed five-year plan to cut ongoing deficits. In addition, he accused the hospital of not being committed to a search for a new CEO.
So far, McDonald said, the center has not produced an adequate response.
It’s not just the state government that NUMC has to contend with. Another obstacle is Nassau County, which backs the hospitals’ estimated $80 million in debt.
The Nassau Interim Finance Authority, a state board that oversees the county’s finances, questioned the accounting practices used by Nassau County in its proposed $4.2 billion 2025 budget. NIFA found that surplus money from previous years was being improperly used to address inadequacies.
NIFA has overseen Nassau’s finances since 1999, when the county was on the verge of financial collapse and required its own state bailout.
The county budget was passed by Republicans 12-6 in a party-line vote despite NIFA’s concerns, but the budget is subject to NIFA’s final say.
In the meantime, NuHealth officials maintain that the hospital has made significant strides over the past year, which are attributed to its current management.
In October, hundreds of hospital employees, first responders, patients, and community members rallied alongside the Hempstead Turnpike to support the immediate restoration of state funding to the center.
Bruderman announced the claim alongside attorneys, hospital staff, and leadership during a Nov. 20 press conference at the hospital.
During the press conference, Bruderman accused the state government, the Nassau County Interim Finance Authority, and Newsday of launching attack campaigns against himself and Interim CEO Ryan.
“The hospital has been shortchanged by the state, who believe it committed fraud on the federal government, and this has been going on for a decade. I believe that NIFA and others knew,” Bruderman said.
NIFA Chairman Richard Kessel denied the claims.
“I think it’s frivolous and superfluous and I think they ought to spend their time cleaning up their own act and figuring out how they’re going to pay the $380 million they owe to NYSHIP rather than filing silly, frivolous lawsuits,” Kessel said.
Steve Cohen, an attorney from Pollock Cohen LLP, a firm representing NUMC, said the evidence of the alleged fraud will be released to the public.
Ryan said the board authorized her to add funds to two existing contracts with two outside law firms, Susman Godfrey and Pollock Cohen, to provide them with up to $325,000 each for “legal services.”
Kessel questioned the changes to the contracts. NIFA is obligated to approve all contracts that are entered into with the hospital.
“We have yet to see these contracts — and have not approved them at this point and so spending any money before our approval would be inappropriate,” Kessel said.
Ryan said “as always, we followed proper Nassau Health Care Corporation and NIFA contracting guidelines.”
Gordon Tepper, a spokesman for Gov. Kathy Hochul said the state is seeking an appropriate resolution to the issue.
“We are continuing to work with the county on an appropriate solution for the future of NUMC,” Tepper said. “Our concerns are the fiscal health of the hospital and patient care. Everything else is just noise.”
Read More: Community rallies to save NUMC from state takeover
