Comptroller Philip Degnan at the Statehouse in Trenton, New Jersey/courtesy photo

Philip Degnan, the state comptroller and a nominee for a state Superior Court judgeship, is accused in a whistleblower suit of signing off on a controversial amnesty program for Medicaid fraud defendants.

Degnan gave his approval in January 2017 to a plan allowing dozens of defendants from Lakewood’s Orthodox Jewish community to resolve Medicaid fraud charges by paying far less than the amounts they owed, according to the lawsuit filed Tuesday in Mercer County Superior Court by a fired investigator in the office, Andrew Poulos.

Poulos was fired in December 2017 a few days after he notified Degnan that his bosses falsely accused him of granting approval to deals that let some Medicaid fraud defendants settle their cases for as little as 50 cents on the dollar. Poulos’ superiors fired him in order to let him serve as a scapegoat and to allow them to stay in Degnan’s good graces, the lawsuit claims.

Poulos claims he was made a scapegoat after media reports criticized his office’s dealmaking with several dozen defendants who were charged with fraudulently obtaining Medicaid benefits by misrepresenting income or other personal information beginning in late 2014.

Poulos brings one count for retaliation in violation of the New Jersey Conscientious Employee Protection Act. He seeks damages for unlawful retaliatory discharge.

Poulos’ lawsuit says he received commendations from superiors for his management of the Lakewood investigation when it started in 2014. He was responsible for supervising the investigation, and communicating with cooperating agencies such as the FBI, Ocean County Prosecutor’s Office, Social Security Administration and New Jersey Department of the Treasury.

The lawsuit could prove awkward for Degnan, who was nominated in September for a Superior Court judgeship and will face questioning from the Senate Judiciary Committee.

Poulos “worked tirelessly to uncover and put an end to Medicaid fraud within Lakewood’s Orthodox community. As alleged in the complaint, his unlawful termination is just another classic case of retaliation by New Jersey political operatives who, rather than face public scrutiny for their own decisions, terminated our client when he blew the whistle on an attempted cover-up,” said Matthew Luber of McOmber & McOmber in Marlton, who represents Poulos along with Peter Draper, R. Armen McOmber and Christian McOmber.

A spokesman for the Office of the State Comptroller, Andrew Cliver, declined to comment.

The Asbury Park Press reported on Oct. 18 that the defendants in the Medicaid fraud prosecution include a member of Lakewood’s Board of Education, Moshe Newhouse. The publication reported that Newhouse received $48,000 in Medicaid benefits for which he was not eligible, but was allowed to resolve the case by paying $24,000 in restitution and a $1,000 fine. Newhouse bought a $500,000 home in Lakewood and obtained a $405,000 mortgage a few days before applying for the amnesty program, the Press reported.