Health Care Matters

A Complimentary Newsletter From:

Law Offices Of David S. Barmak, LLC

Managing Risk for Long Term Care and Health Care Providers

Volume 12, Issue 8                               ADVERTISEMENT                                                AUGUST 2011

In This Issue
New Initiative to Identify and Recover Medicaid Fraud

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New Initiative To Identify And Recover Medicaid Fraud

The New Jersey Medicaid Fraud Division has announced a new initiative effective August 1, 2011, to identify and recover Medicaid fraud. This initiative is known as the Medicaid Recovery Audit Contractor ("RAC") program. It was authorized by the federal Patient Protection and Accountable Care Act of 2010. Congress had such success in the Medicare RAC program that it expanded the program to cover state Medicaid agency payments.


The Medicaid Fraud Control Unit (MFCU) is within the Office of the Attorney General's Division of Criminal Justice.


The MFCU investigates and prosecutes:

  • Fraudulent activities by providers against the Medicaid program.
  • Fraud in the administration of the program.
  • Investigate and prosecute fraud against other federally funded health care programs where there is a Medicaid nexus.
  • Complaints of patient or resident abuse or neglect in health care facilities receiving Medicaid funding such as nursing homes. Also those Medicaid beneficiaries who reside in any other setting outside their home where care is provided to them. Abuse and/or neglect means both physical abuse or neglect and fiscal pertaining to money or property abuse or neglect.
  • Violations of the Civil False Claims Act, where the alleged fraud impacts Medicaid.

Owner of Totowa Nursing Home Sentenced for Billing Medicaid Program for More than $100,000 in Personal Expenses.


Fraud investigated by Attorney General's Office and Department of Health & Senior Services.


TRENTON - Attorney General Paula T. Dow and Criminal Justice Director Stephen J. Taylor announced that the owner of a Totowa nursing home was sentenced today for fraudulently obtaining payment from the Medicaid Program. A state investigation revealed that he billed the Medicaid program for $302,877 in improper and unsubstantiated costs, including more than $100,000 in personal expenses.


According to Acting Insurance Fraud Prosecutor Riza Dagli, Victor Napenas, 64, of Piscataway, was sentenced to 30 days in county jail as a condition of three years probation by Superior Court Judge Irvin J. Snyder in Camden County. In addition, Napenas must pay $302,877 in restitution to the Medicaid program, $45,263 in penalties, and $31,859 in provider taxes owed to the state. He will be prohibited from acting as a Medicaid provider for eight years.


The sentence was based on Napenas' Aug. 16 guilty plea to an accusation charging him with third-degree Medicaid fraud. Napenas owned the Valley Rest Nursing Home on Bogart Street in Totowa, which closed in 2007. In pleading guilty, he admitted that he fraudulently obtained payments from Medicaid for personal expenses unrelated to patient care.


The investigation began when Department of Health and Senior Services (DHSS) surveyors noted severe deficiencies in the care delivered to residents at Valley Rest, which resulted in the owners voluntarily closing the facility in 2007. In the process, DHSS ordered a financial audit, which showed many irregularities on the facility's 2005 cost report submitted to Medicaid.


DHSS referred the matter to the Division of Criminal Justice. The Office of the Insurance Fraud Prosecutor's Medicaid Fraud Control Unit worked closely on this investigation with DHSS, in particular the Department's Director of Nursing Facility Rate Setting.


The investigation revealed that the cost report included $302,877 in improper charges, including personal expenses and other amounts Napenas could not document or prove were spent.


Napenas issued business credit cards to himself and his wife through the nursing home, which they used for personal purchases, including trips to the Philippines, dance lessons and large family dinners. Napenas had those credit card charges and other personal expenses totaling more than $100,000 inserted into the cost report, resulting in reimbursement from Medicaid.


"This nursing home owner treated the facility's Medicaid cost report like his own blank check, fraudulently obtaining reimbursement for over $100,000 in personal expenses in a single year," said Acting Insurance Fraud Prosecutor Dagli. "Fortunately, the Department of Health and Senior Services audited the facility and detected irregularities in the cost report. Our Medicaid Fraud Control Unit will continue to work with the Department of Health and Senior Services to uncover and prosecute fraud and abuse involving Medicaid providers."


Deputy Attorney General Linda A. Rinaldi represented the Office of the Insurance Fraud Prosecutor at the sentencing. The case was prosecuted by Deputy Attorney General Rinaldi and Deputy Attorney General Erik Daab, Director of the Medicaid Fraud Control Unit. Sgt. Frederick Weidman, Auditor Kim Geis and Deputy Attorney General Rinaldi conducted the investigation for the Office of the Insurance Fraud Prosecutor.


Attorney General Dow thanked DHSS Director of Rate Setting Devon Graf for the referral and the extensive assistance of his unit throughout the investigation. She also thanked Supervising Investigator Joe Marty of the Division of Taxation for his assistance.


The Medicaid program, which is funded by the state and federal governments, provides health care services and prescription drugs to persons who may not otherwise be able to afford them. The State of New Jersey administers the Medicaid program through the Division of Medical Assistance and Health Services in the Department of Human Services and through the Office of the Insurance Fraud Prosecutor's Medicaid Fraud Control Unit, which investigates both criminal and civil Medicaid fraud and abuse in that program.


A corporate compliance program should be created and maintained in order to best address potential allegations of fraud and abuse by the Medicaid RAC. A compliance program should focus on ensuring compliance in the areas of quality of care, corporate governance, billings, medical necessity, payments, credentialing, hiring, residents' rights and many other areas subject to federal and state compliance.




Please update your address book.  As of September 1, 2011, the Law Offices Of David S. Barmak has moved to:


29 Emmons Drive

Suite A-20

Princeton, NJ  08540

(609) 454-5351

(609) 454-5361 Fax 


Please remove our old mailing address, phone number and fax number:

1330 Route 206, Suite 103 #400

Skillman, NJ  08558-1921

(609) 688-0055

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Law Offices Of David S. Barmak, LLC

David Barmak established his health care law firm in 1984 to deliver legal services, both in transactions and litigation, to organizations and professional practitioners in the health care field. We call this approach "Enterprise-Wide Risk Management" because it includes three important facets:

  1. Counsel and advisement on all aspects of legal risk, from setting up the entity to corporate governance and compliance;
  2. Protection of your practice or business through litigation prosecution or defense in the Courts; as well as regulatory compliance and licensure issues before government agencies; and
  3. Operations improvement through the implementation of enterprise-wise onsite audits, programs and training seminars in the areas of, but not limited to, Fraud and Abuse, HIPAA Privacy and Data Security, Employment, A/R Management, Emergency Preparedness, and Workplace Violence.David S. Barmak, Esq. received his JD from Cornell University and BA from Duke University. He is licensed to practice and serves clients in the States of New Jersey, New York, Connecticut and Pennsylvania.

He is the immediate past Chair of the Health & Hospital Law Section of the New Jersey State Bar Association. Before making your choice of attorney, you should give this matter careful thought. The selection of an attorney is an important decision. The recipient may, if the newsletter is inaccurate or misleading, report the same to the Committee on Attorney Advertising.


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