Lakewood Fraud Arrests Spawn Program To Recover Medicaid Funds

LAKEWOOD, NJ — In the wake of more than 20 arrests this summer of people accused of public assistance fraud, state officials have announced a program that would give Ocean County residents a chance to pay back Medicaid benefits to avoid criminal prosecution.

The Ocean County Recipient Voluntary Disclosure Program is a pilot program created by the Medicaid Fraud Division of the state comptroller's office in consultation with the Ocean County prosecutor’s office, state officials said.

It will allow Ocean County residents who believe they received Medicaid benefits improperly to withdraw from Medicaid without fear of criminal prosecution. They will be required to repay Medicaid for the benefits they received while ineligible and pay an additional civil penalty based on the amount of improperly received Medicaid benefits, the comptroller's office said. Program participants also must voluntarily withdraw from Medicaid for one year.

"This is not a 'Get of out jail free' card," Comptroller Philip Degnan told NJ.com.

There 90-day program window to apply begins Sept. 12 and ends Dec. 12, Degnan's office said. A public meeting on the program is scheduled for 6:30 p.m. on Tuesday, Sept. 12 at Pine Belt Arena on the grounds of Toms River High School North, 1245 Old Freehold Road in Toms River.

"Given the confidential nature of participation in this program, no recording devices, including cameras, will be permitted at the public meeting," the comptroller's office said.

“Our goal is to bring those in Ocean County who were not in compliance with Medicaid eligibility requirements into compliance and to have them make full restitution of all improperly received funds,” Degnan said.

The program has a benefit to the state, said Josh Lichtblau, director of the Medicaid Fraud Division, in that "it will return Medicaid funds for use by New Jersey residents who truly are in need of assistance.”

The program comes in the wake of a string of arrests and charges earlier this year of 26 Lakewood residents in what authorities say amounts to more than $2 million in public assistance fraud. The benefits received included food assistance and rental assistance, but the bulk of the money involved Medicaid fraud, authorities have said.

Rabbi Zalmen Sorotzkin, his wife, Tzipporah Sorotzkin, and six others were arrested June 26 in early-morning raids and charged with fraud amounting to more than $1.3 million, state and federal authorities said. Two days later three more couples were arrested and charged in fraud alleged to have amounted to nearly $670,000. On July 6, 12 more people were arrested; authorities alleged the couples committed fraud ranging from $53,000 to nearly $75,000, totaling more than $398,000.

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Degnan told NJ.com those already arrested would not be eligible for the program.

Residents who fully satisfy the program requirements will not be referred for criminal prosecution for Medicaid-related fraud "for the period disclosed by the program participant," the comptroller's office said. "The Ocean County Prosecutor’s Office affirms that it will not take action against program participants who comply with the settlement terms."

The arrests this summer were not the first fraud arrests in Lakewood. In 2015, Israel and Esti Safran were arrested and later indicted on charges they fraudulently received $142,000 in Medicaid benefits.

"Those arrests were a warning," said Al Della Fave, spokesman for the Ocean County Prosecutor's Office, which filed the charges against the Safrans. "It's the same as giving 'Don't drink and drive' warnings."

"You would assume people wouldn't need that warning, that they would do the right thing on their own," Della Fave said.

In the wake of the string of arrests and charges, Rabbi Moshe Zev Weisberg issued a statement on behalf of the Lakewood Vaad, which is the religious leadership in the community, saying, "There is no such a thing as 'justified' theft."

"Federal and State social safety-net programs are meant for those in need, even those in need have rules and criteria that must be strictly followed," the statement published by the Lakewood Scoop said. "To deliberately bend a safety-net eligibility rule is stealing, no different than stealing from your friend or neighbor."

Information sessions on how to properly apply for aid and explaining the rules also were held as a result, and the Asbury Park Press reported some residents called Ocean County Social Services in Toms River to cancel their public assistance or update their income information, although social services officials would not confirm or deny that information.

“Residents of Ocean County should consider this program to be their best opportunity to come into compliance without fear of criminal prosecution,” Degnan said.

To be eligible to participate in the program, the person must:

• be an Ocean County resident;
• be or have been a recipient of Medicaid benefits;
• not have previously entered into a settlement with the state comptroller's office;
• not be the subject of a pending state or county criminal matter.

The program application form and instructions, along with a sample settlement agreement, will be posted on the state comptroller's website, www.state.nj.us/comptroller. Applications must be sent in no later than Dec. 12, 2017, officials said.

Applicants will be contacted by the Medicaid Fraud Division for follow-up information (if needed), to provide restitution and penalty information, and to schedule a settlement appointment. Applicants (and their legal representative if they designate one) will then meet with a division representative to sign a settlement agreement.

Settlements will be referred to the state Department of Treasury-Office of Criminal Investigation to determine whether taxes are owed and the Social Security Administration to determine whether SSI benefits must be repaid, Degnan's office said.

Suspected Medicaid waste, fraud or abuse can be reported to the Medicaid Fraud Division by calling its tollfree hotline at 888-937-2835 or by submitting a complaint form located at the following address: http://www.state.nj.us/comptroller/divisions/medicaid/complaint.html.

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