August 2, 2010; Source: Albany Times Union | The Times Union reports that a federal grand jury is investigating whether managers in the New York State Health Department and employees in the nonprofit Research Foundation for the state University of New York faked audits to show that error rates on Medicaid payments were within acceptable federal guidelines.

The newspaper reports that documents submitted to the federal government, which requires random audits of the $22 billion a year program, claimed the “error rate” was below the maximum 3 percent. However, former Research Foundation employees allege that the actual error rate was in excess of 20 percent. Had the true number been reported, it could have cost the state all or part of the billions it receives in federal matching funds.

Along with the grand jury investigation, a case is pending in federal court brought by a former Research Foundation employee who said she was let go after “standing up to” managers she claimed were manipulating the data. Ava Dock, who was fired from the Research Foundation in December, is seeking at least $250,000 in damages.—Bruce Trachtenberg