State seeks more than $17 million under false claims civil law enforcement action
(DES MOINES, Iowa) In a first of its kind civil lawsuit under the Iowa False Claims Act and a state money laundering statute, Attorney General Tom Miller filed a civil lawsuit against the owners of two Keokuk care facilities, alleging money laundering and false or fraudulent Medicaid claims.
The lawsuit, filed in Lee County District Court, alleges that Alan Israel of Phoenix, Arizona, owner of the Lexington Square care facility in Keokuk, the facility’s real estate holding company, and Dave’s Place (now Lexington Place), a Keokuk specialized nursing facility, engaged in a money laundering scheme through the Lexington Square facility. Under the Iowa money laundering statute, the state can seek damages worth three times the value of the property, or $17.4 million. The state also seeks additional unspecified triple damages and civil penalties for alleged false statements and claims.
Israel’s son, Jason Israel of Phoenix, is also named in the lawsuit as a minority owner of Lexington Square and Dave’s Place.
“We allege that the defendants defrauded our state’s Medicaid system in a significant way,” Miller said. “That’s why we filed this lawsuit under the Iowa False Claims Act, which allows us to seek very substantial penalties,” Miller added. “We intend to hold these people fully accountable for the Medicaid fraud and money laundering that we allege in this civil law enforcement action.”
According to the lawsuit, the defendants made false statements and false claims. “The violations include various and repeated false or fraudulent claims for reimbursement from the Iowa Medicaid program through the use of false or fraudulent cost reports,” the petition alleges.
“Alan Israel directed the Lexington Square controller to have Lexington Square pay for personal expenses that were not connected with the operation of Lexington Square,” according to the petition. “When the controller for Lexington Square would question Alan Israel as to placing it on the cost report, Alan Israel responded to the controller, ‘just try to get it on the cost report.’”
The petition further alleges that improper expenses submitted to the Iowa Medicaid program included airline and train travel, hotel rooms, payments for an employee’s camper, and various fraudulent financial transactions and unallowable expenses.
As a result of these false and fraudulent claims submitted since July 2010, according to the petition, Iowa’s Medicaid program reimbursed the defendants substantially more than they were entitled to.
The current civil action is the result of an eight-month investigation conducted by the Medicaid Fraud Control Unit of the Iowa Department of Inspections and Appeals (DIA). The investigation was initiated by a referral from the Program Integrity Unit of the Iowa Department of Human Services, which learned of potential irregularities in cost reports.
“This action represents a landmark for the State of Iowa,” DIA Director Rod Roberts said. “This is the first case brought against defendants under the provisions of Iowa’s False Claims Act.” Roberts noted that those who suspect Medicaid fraud should contact the Medicaid Fraud Control Unit at 1-800-831-1394.
Medicaid, which is a state-federal funded program administered through the Iowa Department of Human Services, provides health care coverage for children, financially-needy parents with children, people with disabilities, elderly people, and pregnant women.
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