Call it one very expensive "Oops!"
By missing a deadline, New York State provided a $2.5 million bonanza for Lawrence E. White, former owner of a Buffalo nursing home.
An arbitrator recently awarded the money to White because somebody in state government failed to punch a few entries into a state Social Services Department computer two years ago.
As a result, authorities confirmed Thursday, taxpayers very soon will pay White $2.5 million -- including $100,000 or more in legal fees. The payment stems from a complex dispute over Medicaid reimbursement that White received while running the Hamlin Terrace Nursing Home on Delaware Avenue.
"As a taxpayer, I have such a low estimation of government that I actually expected there was a good possibility they might mess up," said White's attorney, William F. Savino. "In private industry, you'd never see a mistake like this, somebody giving away $2.5 million."
What upsets state officials is that White already had agreed -- as part of a 1995 mediation settlement -- that the state did not have to pay him the money.
If a few entries had been made by a Sept, 21, 1995, deadline on a computer that was keeping track of Medicaid funds, White would not receive the money.
But somebody goofed. The entries weren't made, and White is getting his millions.
"The deadline was missed, and our position is, a deal is a deal," said Savino.
State officials have no one but themselves to blame for the error, wrote Jay M. Cohen, an independent arbitrator who decided the case in White's favor.
"This was a mistake," Cohen wrote in a 10-page decision. "It was, however, a unilateral mistake. . . . "The mistake clearly falls entirely on one side."
Mike Zabel, Buffalo spokesman for the State Attorney General Dennis C. Vacco, said the state strongly disagrees with Cohen's decision but has little choice but to pay White.
"An arbitrator basically found that
the way our agreement with Hamlin Terrace was written, the state owes Mr. White $2.5 million," Zabel said. "We disagreed with his finding.
"Our position is that, under the purpose and the spirit of the settlement that was reached, we should not owe Mr. White this money," Zabel said.
Who is to blame for the information not being punched into the state computer?
Zabel was reluctant to lay blame on any specific person.
White moved to Orlando, Fla., several years ago. His nursing home company filed for bankruptcy in 1992. The Hamlin Terrace facility is now owned and operated by a different company.
White's financial dispute with the state dates back to early 1995, when state officials were insisting White's company had received millions of dollars more in Medicaid reimbursements than it was supposed to receive.
"The state had conducted audits, and they concluded that Hamlin Terrace owed them about $3 million," said Savino. "We disagreed. The case went to a mediator, and we finally came to an agreement."
The agreement allowed the state to withhold any Medicaid funds that were earmarked for Hamlin Terrace, as long as the state withheld the funds by the Sept. 21, 1995, deadline.
"But the state missed the deadline," Savino said. "So we took the position that we should get the $2.5 million, and the arbitrator agreed."
Officials said this is not the first bonus of government money that White's nursing home firm as received. White and his partners paid themselves $1.7 million in fees for unverified services, according to documents filed by the federal government in 1994.
Also in 1994, White and his partners reached a settlement with the U.S. Department of Housing and Urban Development, barring them from doing business with any federal agency for five years. They agreed to the penalty without admitting any wrongdoing.
Zabel said the Attorney General's Medicaid Fraud Control Unit "is continuing to investigate a number of issues regarding Medicaid payments to Hamlin Terrace, and regarding the Hamlin Terrace bankruptcy."