December 03, 2016

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending December 1, 2016

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending December 1, 2016 
Source: Office of the State Comptroller

Links to material posted on the Internet highlighted in COLOR.

Robert Schusteritsch impersonated his deceased brother to collect his brother’s State retirement benefits 

New York State Comptroller Thomas P. DiNapoli and Attorney General Eric T. Schneiderman announced today the conviction and sentencing of Robert J. Schusteritsch, 71, a resident of the state of Florida, for the crimes of grand larceny in the second degree, a class C felony, and criminal impersonation in the second degree, a class A misdemeanor, in Albany County Court.

Schusteritsch’s conviction comes after a joint investigation by the Office of the Comptroller and the Attorney General’s Office, which revealed that Schusteritsch stole over $180,000 in pension benefits issued by the
New York State and Local Employees Retirement System to his deceased brother, Martin Petschauer, between July 2008 and September 2015.

According to the Comptroller and Attorney General’s offices, Petschauer was a New York State pensioner who retired as Chief of the Pooling and Audit Review Section of the New York Metro Milk Marketing Area in approximately 1986.  He passed away on July 9, 2008.  At the time of Petschauer’s death, his pension benefits were being direct deposited into a bank account held in a trust for the benefit of Petschauer; Schusteritsch was the sole trustee for his brother and had exclusive access to the bank account.  
When Petschauer died, Schusteritsch concealed his brother’s death from the bank and the Retirement System and kept the trust account open to maintain the direct deposits.  He then routinely accessed the pension deposits and spent the money for his own benefit.   All told, Schusteritsch stole over $180,000 in pension benefits until the Retirement System discovered Petschauer’s death in October 2015. Further, when the Retirement System learned of Petschauer’s death and stopped paying benefits into the trust account, Schusteritsch called the Retirement System’s call center on
November 2, 2015, pretended he was Petschauer, and asserted that he was not actually dead, in an effort to maintain eligibility for the pension benefits.

This past summer, Schusteritsch was arrested in his home state of Florida and transported to Albany County, where he was arraigned on an indictment charging him with the crimes of Grand Larceny in the Second Degree, a class C felony, and Criminal Impersonation in the Second Degree, a class A misdemeanor.   On September 16, 2016, Schusteritsch pleaded guilty before Hon. Peter A. Lynch, Albany County Court, to the entire indictment.
Schusteritsch was sentenced by the Hon. Peter A. Lynch to six months in jail and five years’ probation, and signed a confession of judgment in the amount of $180,140.45 in favor of the
New York State and Local Employees Retirement System on December 2, 12016

"Today’s sentencing of Mr. Schusteritsch proves once again that stealing from New York State's pension system is risky business," said State Comptroller DiNapoli. "My office will continue to thwart pension thieves and protect our New York State & Local Retirement System in partnership with Attorney General Schneiderman." 

“Those who illegally obtain pension funds intended for someone else do so at the expense of hardworking New Yorkers who rely on their pension for a secure retirement,” said Attorney General Schneiderman. “Comptroller DiNapoli and I will continue our joint efforts to root out pension system theft and hold those responsible accountable.”

The case is the latest joint investigation under the Operation Integrity partnership of the Comptroller and Attorney General, which to date has resulted in dozens of convictions and more than $11 million in restitution.

Comptroller DiNapoli and Attorney General Schneiderman thanked the Charlotte County Sheriff’s Office in Florida for their assistance.

The Comptroller’s investigation was handled by the Division of Investigations working with the
New York State and Local Retirement System.

The case was prosecuted by Assistant Attorney General Benjamin S. Clark of the Criminal Enforcement and Financial Crimes Bureau. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chief Stephanie Swenton.

The Attorney General’s investigation was conducted by Investigator Samuel Scotellaro, III and Deputy Chief Antoine Karam. Forensic accounting was performed by Meaghan Scovello, Associate Auditor. The Investigations Bureau is led by Chief Dominick Zarrella.  The Forensic Audit Section is led by Chief Auditor Edward J. Keegan.

The State Comptroller encourage anyone with information on alleged public corruption activities to contact the Comptroller’s office by dialing the toll-free fraud hotline at 1-888-672-4555; to file a complaint online at; or to mail a complaint to: Office of the State Comptroller Investigations Unit, 110 State Street, 14th floor, Albany, NY 12236.

New York StateComptroller’s auditors identify Medicaid overpayments made to Medicare providers

New York State’s Medicaid system made approximately $6.8 million in inappropriate payments, including $3.5 million for separately billed medical services that should have been covered by managed care plans, according to an auditreleased by State Comptroller Thomas P. DiNapoli. By the end of audit fieldwork, about $2.4 million of the overpayments were recovered.  

Additionally, auditors identified 15 Medicaid providers who were charged with or found guilty of crimes that violated the laws or regulations of a health care program. In addition, auditors found three providers who were involved in civil settlements. They advised DOH officials of the 18 providers and DOH terminated 14 of them from the Medicaid program. Another was also terminated from the program following the audit, according to DOH.  

New York’s Medicaid program, administered by the State Department of Health (DOH), is a federal, state, and locally funded program that provides a wide range of medical services to those who are economically disadvantaged or have special health care needs. DOH’s eMedNY computer system processes Medicaid claims submitted by providers for services rendered to Medicaid-eligible recipients and generates payments to reimburse the providers for their claims.

New York’s Medicaid system is vast and complex with plenty of opportunity for waste and abuse,” DiNapoli said. “My auditors found several cases in which the Department of Health’s eMedNY system failed to catch millions in overpayments. To its credit, the Department is working to recoup these overpayments and make adjustments to its processing systems to prevent these problems from reoccurring.”

DiNapoli’s office audits Medicaid payments on a routine basis to make sure claims are being paid appropriately and to determine if improvements are needed and whether money should be recovered because of errors, abuse or fraud. In 2015, DiNapoli’s auditors identified problems or irregularities with $223 million in payments.

DOH pays Medicaid providers through the fee-for-service method and the managed care plan method. Under the fee-for-service method, Medicaid pays health care providers directly for Medicaid-eligible services rendered to Medicaid recipients. Under the managed care plan method, Medicaid pays each managed care plan a monthly premium for each enrolled recipient and the plan arranges for the provision of services to its members. Plans typically have networks of participating health care providers that they reimburse directly for services provided to their enrollees. Generally, the costs of all services that plan enrollees require are covered by monthly premiums.

DOH uses eMedNY to make Medicaid payments to participating health care providers and managed care plans. The system is used to determine whether claims are eligible for reimbursement. For example, eMedNY will deny fee-for-service claims for services that are covered by a recipient’s managed care plan.

DiNapoli’s audit identified $3,521,562 in overpayments for 14,983 fee-for-service clinic claims that were inappropriate. The claims were processed on behalf of 3,504 recipients who were enrolled in a particular managed care plan. Auditors determined the services were covered by the plan and therefore, fee-for-service claims should not have been paid. A data entry error in eMedNY allowed clinic services for enrollees of this plan to be processed as fee-for-service. After being alerted to the issue, DOH immediately updated eMedNY to prevent future inappropriate payments.

DiNapoli’s auditors also found:

· $1,342,307 in overpayments for claims billed with incorrect information pertaining to other health insurance coverage that recipients had;

· $937,424 in overpayments for newborn claims that were submitted with incorrect birth weights;

· $389,813 in improper payments for inpatient, clinic, durable medical equipment, transportation, and eye care services;

· $333,504 in improper payments identified by the Centers for Medicare & Medicaid Services that DOH did not recover from providers;

· $260,330 in overpayments for inpatient claims that were billed at a higher level of care than what was actually provided; and

· $50,767 in improper payments for duplicate billings. 

DOH officials generally agreed with the audit recommendations and indicated that certain actions have been and will be taken to address them. DOH’s full response is included in the complete audit.

Other audits and reports issued
Auditors identified $16,699 in costs charged to the preschool special education programs that did not comply with SED’s requirements for reimbursement. The non-reimbursable costs included $5,394 in ineligible property expenses, $3,609 in ineligible food costs, $2,337 in ineligible costs for consultant services, $2,309 in non-program-related costs, and $3,050 in other non-reimbursable costs.
For the fiscal year ended June 30, 2014, auditors identified $13,201 in costs that were charged to the preschool special education programs that did not comply with SED’s requirements for reimbursement. The ineligible costs included $7,042 in other than personal service costs and $6,159 in personal service costs. 

State Education Department: Susan E. Wagner Preschool, Compliance with the Reimbursable Cost Manual (2015-S-100)
For the three fiscal years ended June 30, 2014, auditors identified $140,902 in reported costs that did not comply with SED’s requirements for reimbursement, including $81,370 in real estate taxes, $39,709 in unsupported or ineligible compensation costs for six employees; $18,650 in inadequately documented consultant costs; and $1,173 in ineligible staff food costs.
Auditors examined 138,962 individual high-risk PTF Credit payments totaling more than $75.9 million. They identified 31,924 questionable payments totaling almost $8 million for follow-up evaluation and appropriate action, including: 25,567 payments totaling $5,480,752 due to calculation errors; 3,998 payments totaling $1,621,590 where either the homeowner or property was not eligible for the STAR property tax exemption; and 2,052 payments totaling $818,766 to deceased homeowners.


Subsequent court and administrative rulings, or changes to laws, rules and regulations may have modified or clarified or vacated or reversed the decisions summarized here. Accordingly, these summaries should be Shepardized® or otherwise checked to make certain that the most recent information is being considered by the reader.
New York Public Personnel Law Blog Editor Harvey Randall served as Principal Attorney, New York State Department of Civil Service; Director of Personnel, SUNY Central Administration; Director of Research, Governor’s Office of Employee Relations; and Staff Judge Advocate General, New York Guard. Consistent with the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations, the material posted to this blog is presented with the understanding that neither the publisher nor NYPPL and, or, its staff and contributors are providing legal advice to the reader and in the event legal or other expert assistance is needed, the reader is urged to seek such advice from a knowledgeable professional.
New York Public Personnel Law. Email: