Pennsylvania hospital pays $1.9 million to settle Medicare fraud case brought by whistleblower

Nov. 24, 2008, ERIE, PENNSYLVANIA -- St. Vincent Health System Inc., based in Erie, Pennsylvania, has agreed to pay $1.9 million to the federal government to settle a whistleblower lawsuit that alleged the hospital submitted reimbursement claims to Medicare that greatly exceeded its actual costs.

The settlement by St. Vincent -- filed in district court in Newark, New Jersey, today - is the latest of several settlements by hospitals named in a "qui tam" (whistleblower) lawsuit brought in 2005 by Anthony Kite, an independent hospital consultant in New Jersey.

Kite alleged in his lawsuit that St. Vincent inflated its reimbursement claims to Medicare from 2001 to 2003 to receive supplemental, or "outlier," payments. Similar allegations were made against the other hospitals. The Medicare program makes 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 outlier program has been vulnerable to fraud by healthcare providers," said Larry P. Zoglin, a San Francisco attorney with Phillips & Cohen, which is representing the whistleblower in the qui tam case. "In numerous instances, whistleblowers have exposed this drain on Medicare."

Most qui tam lawsuits succeed only if the government joins the case. But for the second time in Kite's lawsuit, Phillips & Cohen secured a settlement for the federal government without government intervention. Last month, St. Joseph Healthcare System Inc. paid $1.75 million to the federal government to settle its case.

Cooper University Hospital in Camden, New Jersey paid $3.85 million to settle a case brought by Kite. In addition, Kite was one of several whistleblowers who brought successful qui tam lawsuits against Warren Hospital in Phillipsburg, New Jersey (which settled for $7.5 million); Bayonne Medical Center in Bayonne, New Jersey ($2.5 million); Cathedral Healthcare System, in Newark, New Jersey ($5.3 million); and Raritan Bay Medical Center in Perth Amboy, New Jersey ($7.5 million).

Phillips & Cohen is the largest and most successful law firm that specializes exclusively in representing whistleblowers in qui tam lawsuits and tax fraud matters. For more information about Phillips & Cohen's record, see P&C's Successful Whistleblower Cases.