Edison, Preferred, and Former Operators Will Pay $7.5 Million to More Than 25,000 Current and Former Employees They Cheated, Pay $9.75 Million to the Medicaid Program in Largest Wage Parity Settlement Ever Secured by OAG and EDNY
New York Attorney General Letitia James and U.S. Attorney for the Eastern District of New York Breon Peace announced agreements with two Brooklyn-based licensed home care services agencies (LHCSAs) – NAE Edison d/b/a Edison Home Health Care of New York, LLC and Assistcare Home Health Services, LLC d/b/a Preferred Home Healthcare of New York, LLC – and their former operators (Edison and Preferred) for allegedly cheating more than 25,000 employees out of hard-earned wages and benefits and defrauding Medicaid. For years, Edison and Preferred failed to pay home health aides, many of whom are immigrant women and women of color, full compensation for their work as required by law. Instead, they used funds intended to provide workers with benefits like paid vacation time to increase their own bottom line.
As a result of the Office of the Attorney General’s (OAG) settlement, Edison and Preferred will pay $7.5 million in unpaid wages to more than 25,000 current and former employees and pay $9.75 million to the Medicaid program. Edison and Preferred have also entered into an agreement with the United States Attorney’s Office for the Eastern District of New York (EDNY) to resolve federal Medicaid fraud liability. This settlement is the largest reached by OAG for violations of the Wage Parity Act to date.
“Home health aides provide crucial care to our most vulnerable neighbors and loved ones, and they deserve to be paid for their hard work,” said Attorney General James. “Edison and Preferred cheated employees out of years of pay and cheated New York taxpayers by defrauding Medicaid for their own benefit. This is a tremendous victory for our ongoing efforts to protect hardworking New Yorkers’ rightfully earned wages. My office will do everything in our power to ensure that companies cannot steal wages and take advantage of the system. Thank you to U.S. Attorney Breon Peace for his continued partnership in rooting out Medicaid fraud.”
“Home health aides work long hours at difficult, often thankless tasks to ensure that the vulnerable individuals who they provide services to are properly cared for,” said U.S. Attorney Breon Peace. “These aides deserve the hard-earned benefits guaranteed them under the law and my office will ensure that they are accurately compensated.”
The home health aide workforce is predominantly comprised of women who are often immigrants or people of color. Aides provide comprehensive in-home care to sick or homebound patients, doing everything from bathing, dressing, and grooming to feeding, lifting, and transporting patients who cannot do so themselves. Home health aides work long hours and at times can be subject to emotionally taxing treatment from patients struggling with their physical and mental health. The New York Wage Parity Act was created to ensure home health aides receive fair compensation and benefits for their hard work.
The Wage Parity Act sets wage and benefit minimums that LHCSAs are required to pay to staff who perform home health aide and personal care services to Medicaid recipients. Under the current law, LHCSAs must pay workers in New York City and Nassau, Suffolk, and Westchester counties a base wage of $18.55 per hour plus an additional $1.67 (in Nassau, Suffolk, and Westchester) or $2.54 (in New York City). The additional amount per hour can be paid in cash wages or in benefits such as paid vacation time. In order for LHCSAs to get Medicaid reimbursements for home care services provided to Medicaid recipients, they must comply with these minimum wage and benefit requirements.
The joint OAG and EDNY investigation found that Edison and Preferred failed to pay their home health aides the full benefits owed to them under the Wage Parity Act. Edison and Preferred used the wage parity funds required by law to benefit aides to instead purchase medical “stop loss” insurance, which is a type of insurance that acts as a safety net for employers that are paying for their employees’ medical claims. The joint investigation also revealed that individuals and entities related to Edison and Preferred received millions of dollars in dividend payments from this “stop loss” insurance, which effectively served as a means of siphoning away funds intended for employees. Edison and Preferred then continued to seek and receive payments from Medicaid for care performed by home health aides, while falsely representing that they were in compliance with the Wage Parity Act.
Edison and Preferred will repay $7.5 million to current and former home health aides for unpaid wages and benefits. Edison and Preferred will also revise company policies and procedures, train personnel on updated policies subject to OAG’s approval, and regularly report staff wages and policy implementations to OAG for a period of three years. If Edison and Preferred fail to comply with these terms or properly compensate its aides, OAG has the authority to bring a civil action against the agency and demand additional damages.
Edison and Preferred will also pay $9.75 million to the Medicaid Program, of which $5.85 million will go to New York state. The remaining $3.9 million will be paid to the federal government.
The OAG and EDNY commenced these investigations after whistleblowers filed a complaint under the qui tam provisions of the New York False Claims Act and the federal False Claims Act in the U.S. District Court for the Eastern District of New York. The New York False Claims Act allows individuals to file actions on behalf of the government and share in any recovery. The state has since filed a notice of intervention against Edison and Preferred for the purposes of settling its Medicaid fraud claims.
Attorney General James thanks U.S. Attorney Peace and EDNY for their collaboration on this matter.
New York MFCU’s total funding for federal fiscal year (FY) 2024 is $68,997,928. Of that total, 75 percent, or $51,748,448, is awarded under a grant from the U.S. Department of Health and Human Services. The remaining 25 percent of the approved grant – totaling $17,249,480 for FY 2024 – is funded by New York state. Through its recoveries in law enforcement actions, MFCU regularly returns more to the state than it receives in state funding.
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