Whistleblowers yield nearly $30M in Medicare fraud from N.J. hospitals

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Whistleblowers have played a huge role in stopping Medicare fraud. Image Source: CBS News  

St. Joseph Healthcare System has agreed to pay $1.75 million to the federal government to settle a whistleblower lawsuit that alleged the Paterson, N.J.-based hospital engaged in Medicare fraud by improperly inflating its Medicare reimbursement claims.

The settlement, filed in federal district court Tuesday, follows a string of multi-million-dollar settlements resulting from qui tam lawsuits against N.J. hospitals for allegedly inflating their reimbursement claims to Medicare to receive supplemental, or ‘outlier,’ payments. Medicare has made outlier payments to hospitals when the actual costs for treating a particular patient greatly exceed a predetermined reimbursement amount for that type of treatment.

“The number of hospitals that have settled these cases in New Jersey makes clear that fraudulent outlier payments have been a drain on the Medicare program,” said Larry P. Zoglin, a San Francisco attorney at Phillips & Cohen, who represented the whistleblower in the qui tam case. "Whistleblowers have played a huge role in stopping the fraud."

The qui tam lawsuit against St. Joseph’s was filed in 2005 in federal district court in Newark, N.J., by Anthony Kite, an independent hospital consultant. The suit alleged that St. Joseph’s submitted reimbursement claims to Medicare that exceeded its actual treatment costs so that it would receive outlier payments.
In a related whistleblower case, Cooper University Hospital in Camden, N.J., paid $3.85 million last month to settle a qui tam lawsuit brought by Kite. The hospital consultant also was one of several whistleblowers, who filed qui tam lawsuits alleging outlier fraud by other N.J. hospitals. The hospitals that have settled those cases involving outlier payments were: Warren Hospital in Phillipsburg, N.J. (paying $7.5 million); Bayonne Medical Center in Bayonne, N.J. ($2.5 million); Cathedral Healthcare System in Newark, N.J. ($5.3 million); and Raritan Bay Medical Center in Perth Amboy, N.J. ($7.5 million).