Patients were in hospital beds, but adult day care claims went out in their names anyway. In Flushing, Queens, in New York City, businesses billed Medicaid for services those people couldn’t have received while hospitalized.
Daniel Lee, a program director at Happy Life and Royal Adult Day Care Center, pleaded guilty on November 9 in a roughly $127 million Medicare and Medicaid fraud scheme.
From the DOJ:
“For over a decade, Daniel Lee helped run a brazen kickback scheme that stole from Medicare and Medicaid through fraudulent claims for medically unnecessary prescription drugs and social adult day care services that were never provided,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “Yesterday’s guilty plea underscores the Department’s commitment to holding accountable those who exploit federal health care programs for personal gain.”
“Yesterday’s guilty plea marks the end of the defendant’s long running and staggering fraud against the Medicare and Medicaid programs,” said U.S. Attorney Joseph Nocella Jr. for the Eastern District of New York. “Our Office is working diligently to uncover and prosecute social adult day care fraud schemes to protect the vital public benefit programs that so many Americans rely on.”
Anyone who has spent time fighting for medical coverage should pause over those details. A legitimate patient can struggle to get a service approved, while a dishonest provider collects money for care never delivered. Every fraudulent payment consumes resources entrusted to programs serving people who need help.
Lee’s scheme ran for approximately a decade. It included cash kickbacks to induce enrollment and related pharmacy billing for unnecessary prescriptions. He pleaded guilty to conspiracy to commit healthcare fraud and conspiracy to commit money laundering. He is scheduled to be sentenced on March 2, 2027. The $127 million covers the broader scheme, including prescriptions, not just hospital-overlap billing.
The guilty plea establishes criminal responsibility. It also leaves a public responsibility: explain which controls failed and how officials will prevent the next operation from collecting for years.
New York’s own auditors have documented substantial weaknesses. A February audit, covering January 2019 through October 2024, identified more than $285 million in questionable payments for services dated after providers had been terminated from at least one managed long-term care network. Some providers dropped for cause continued receiving payments through other plans.
Questionable payments aren’t automatically stolen money, and the audit’s figure mustn’t be added to Lee’s scheme as a separate proven loss. Still, the findings expose an obvious administrative problem. If one plan identifies a provider as a problem, other plans need timely information and a clear process for deciding whether to continue payments.
At three centers auditors visited, nearly 8,000 encounter claims, totaling $672,147, lacked supporting sign-in logs. Auditors also found that state rules and health officials hadn’t specified sufficient documentation to support billing. They recommended stronger monitoring and recovery of improper payments where appropriate.
A program that pays for attendance needs dependable attendance records. Requiring providers to show that someone received a service is a basic obligation of accepting public money. Officials should be able to explain how they check claims against hospital stays, investigate conflicts, and stop repeat violations.
State auditors merit credit here. The comptroller’s office referred findings and worked with law enforcement. Health officials also described efforts to strengthen oversight. The record supports demanding better controls, while recognizing the people who helped expose wrongdoing.
Prosecutors can punish fraud after investigators reconstruct the transactions. Administrators have a separate job: making fraudulent payments harder to collect in the first place. Both duties belong in any credible promise to protect Medicaid.
The test should be practical. Can a billing reviewer identify overlapping hospital dates? Does a provider’s removal trigger scrutiny across the plans still paying it? Are unsupported claims corrected and improper payments recovered? Public officials should publish measurable results so taxpayers can judge whether announced safeguards actually work.
Announcing a policy is only the beginning.
People who depend on adult day care need reliable services. Families need confidence that a loved one’s attendance and care are being recorded accurately. Taxpayers need officials willing to explain failures without hiding behind the program’s size or complexity.
Lee will face a judge. The officials responsible for overseeing these payments should face questions just as plainly.
What changed, who must enforce it, and how will the public know it’s working?
A guilty plea closes one chapter, but preventing the next decade of theft requires answers.
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