The Murphy administration’s handling of a massive Medicaid fraud case in Ocean County last year merely looked like it was giving a politically connected group a break.
Now it looks like the break might include the state foregoing criminal charges and $2.6 million in restitution, and blaming it all on a single lower level state employee.
In the summer of 2017, 26 members of a Lakewood community of Orthodox Jews were arrested, mostly in a series of FBI raids, on charges of defrauding Medicaid of a combined $2 million. In early fall, State Comptroller Philip Degnan announced an amnesty program to encourage many others in the community who had defrauded Medicaid to withdraw from coverage, pay restitution and penalties, and avoid criminal prosecution.
The Ocean County-only amnesty for Medicaid fraud, which is common in New Jersey and elsewhere, was the first in the state and by all accounts the first in the nation. The group’s civic leaders were given exclusive access to state officials during the planning of the amnesty, the Asbury Park Press reported.
In the past month the Office of the State Controller revealed that while the amnesty program had recouped $2.3 million from 159 participants, it also had reduced their restitution by $2.6 million. It blamed the lost restitution on a program supervisor who it said had negotiated the reduced restitution on his own, without the knowledge of anyone else in the Office of the State Controller.
But then supervisor Andrew Poulos Jr. produced a confidential Office of the Comptroller internal memo saying three levels of managers, including one who reports directly to Degnan, knew about the amnesty deals ahead of time. The memo also says the head of the office’s Medicaid Fraud Division signed off on offering the deals.
The Comptroller’s Office denied the conversations in the 2017 memo occurred. A spokesman said “the meeting may have taken place but that particular portion of it, the discussion of whether negotiations were proper, we have denials of that.”
Yet despite alleging that seven-year employee Poulos acted alone, it didn’t fire him — just discontinued his job when the amnesty program ended. And Degnan subsequently defended the reduced restitution. “I don’t believe we gave away all that much, if anything, from this program,” he told NJ Advance Media. “I understand the criticism, but I didn’t view this differently from gun buyback or tax amnesty programs.”
At the end of last month, Poulos filed a whistleblower lawsuit that included new and disturbing accusations, according to NJ 101.5, including that the state isn’t pursuing hundreds of cases of fraud by Lakewood residents who declined to participate in the amnesty program nor criminal charges against those caught before the amnesty was offered.
The lawsuit also says Degnan’s predecessor as state comptroller, Matthew Boxer, represented the Orthodox Jewish community’s civic council in private discussions that led to the amnesty program. Degnan is said to have signed off on the amnesty five months before the arrests were made and informed the civic council about the amnesty three months before announcing it to the public.
Some of the members of the Orthodox community swept up in the fraud may have been misled by others with an overly generous view of Medicaid eligibility.
But this multi-million-dollar fraud of the state’s health-care program for those with very low incomes was planned and executed by people who should face criminal charges.
The Murphy administration’s handling of the vast Medicaid fraud in Lakewood suggests there is a corruption of the state justice system, with one level of enforcement for the politically connected and another, more severe version for everyone else.
A full investigation is needed to restore public faith in equal justice under the law.