New Jersey hospital pays $3.85 million to settle whistleblower lawsuit

Medicare fraud case involved inflated claims for "outlier" payments

Sept. 24, 2008 - Cooper University Hospital has agreed to pay $3.85 million to the federal government to settle a whistleblower lawsuit that alleged the Camden, New Jersey, hospital engaged in Medicare fraud by inflating its Medicare claims to increase its revenues.

The "qui tam" (whistleblower) case against Cooper hospital, which the federal government joined, was under seal and not known to the public until today.

The Medicare fraud allegations involved "outlier" payments, which are supplemental payments Medicare makes when the actual costs for treating a particular patient exceed a predetermined amount for that type of treatment.

From 2001 to 2003, the whistleblower said, Cooper hospital submitted to Medicare reimbursement claims that inflated its actual treatment costs so that it qualified on paper for outlier payments. As a result, the hospital received millions of dollars in outlier payments that it wasn't entitled to receive.

"The government has been able to recover this money because of the information provided by a whistleblower," said Larry P. Zoglin, a San Francisco attorney with Phillips & Cohen LLP, which represented the whistleblower. "Without our client's help, they probably wouldn't have found out about Cooper's alleged outlier fraud scheme."

The qui tam lawsuit was filed in 2005 in federal district court in Newark, New Jersey, by Anthony Kite, an independent hospital consultant in New Jersey. Kite also was one of several whistleblowers who filed qui tam lawsuits exposing outlier fraud by other New Jersey hospitals. The hospitals that have settled those cases involving outlier payments were: Warren Hospital in Phillipsburg, New Jersey ($7.5 million); Bayonne Medical Center in Bayonne, New Jersey ($2.5 million); Cathedral Healthcare System, based in Newark, New Jersey ($5.3 million); and Raritan Bay Medical Center in Perth Amboy, New Jersey ($7.5 million).

Zoglin complimented the U.S. Department of Justice Civil Division and the U.S. Attorney's Office for the District of New Jersey for its investigation and prosecution of the case. "The government has made clear that it won't tolerate hospitals that engage in Medicare fraud to try to boost their revenues at taxpayer expense," he said.

Phillips & Cohen specializes in representing whistleblowers in qui tam lawsuits. Under the False Claims Act, private individuals can sue companies defrauding the government and recover funds on the government's behalf. Whistleblowers, known as "relators," are entitled to 15 percent to 25 percent of the amount recovered as a result of the lawsuit. For more information about Phillips & Cohen and qui tam lawsuits, see


Case citation: U.S. ex rel. Kite v. Besler Consulting, et al,Case No. 05 :CV3066 (D.N.J.)