Lee was a program director at Happy Life Inc. and Royal Adult Day Care Center, two SADC centers in Flushing. The centers offered Medicaid recipients cash to enroll, then billed Medicaid for care they never received. Lee and his co-conspirators also helped run a related pharmacy scheme involving prescriptions that patients didn’t need.
“Paying kickbacks and billing for services that were never provided is not patient care. It is theft from programs that vulnerable people depend on,” Scott J. Lampert, deputy inspector general for investigations with the U.S. Department of Health and Human Services, said in a statement.
A decade of fraudulent claims
SADC centers are designed to help older adults and people with disabilities continue living at home while receiving extra support during the day. They typically offer meals, activities and help with everyday tasks.
“Social adult daycare centers play valuable roles serving New Yorkers in need in their communities,” New York Attorney General Letitia James said in an October statement about the state’s crackdown on fraud. “These centers should be focused only on providing fulfilling and enriching programming, not generating fraudulent profits for their owners.”
According to a February New York Post report, which cited the original federal complaint, seniors were allegedly offered $500 a month to join one of Lee’s facilities. Those who showed up reportedly received less, with their payments dropping to $300.
Meanwhile, the centers were billing Medicaid for people they claimed to serve, even when those individuals hadn’t received care. At Royal Adult Day Care, the numbers were not adding up. The facility regularly reported more than 700 visitors a day, despite having a maximum occupancy of 81 people. In August 2022, it allegedly billed Medicaid for 1,041 visits from members in a single day.
According to the complaint, the pharmacy was also involved in the alleged fraud by filling prescriptions for items such as pain relief patches. For every 60-patch prescription, the pharmacy received $525 and allegedly gave $100 back to the day care members. Lee also allegedly threatened to stop paying members if they used other pharmacies.
When authorities searched Happy Life, they found more than $100,000 in cash and seized approximately $900,000 in fraud proceeds from bank accounts, according to the Justice Department.
New York may eliminate its adult day care program
Lee’s case is just one of several fraud investigations involving New York’s SADC centers. In October, Gov. Kathy Hochul announced a crackdown targeting more than 100 providers suspected of fraud or other misconduct. She also ordered a review of the program, which serves approximately 45,000 Medicaid recipients across more than 400 SADC centers and costs taxpayers over $500 million a year.
