Whistleblower played key role in Medicare fraud case against 11 hospitals; New York hospital latest to settle

LONG ISLAND, NEW YORK, Feb. 25, 2010 - Brookhaven Memorial Hospital Medical Center, a Long Island, N.Y, hospital, has agreed to pay $2.92 million, plus interest, to settle a "qui tam" (whistleblower) case that alleged the hospital defrauded Medicare by inflating Medicare reimbursement claims to obtain supplemental payments known as "outlier" payments.

The settlement brings to eleven the total number of hospitals that have paid the federal government to settle a qui tam lawsuit brought by Anthony Kite, an independent hospital consultant in New Jersey.

In each instance, the hospital allegedly inflated treatment charges to Medicare patients to obtain outlier payments. Medicare provides outlier payments to hospitals and other healthcare providers to supplement standard reimbursement amounts when the costs of care of Medicare patients are unusually high.

Kite's qui tam lawsuit was filed in federal district court in Newark, New Jersey, in 2005 by Phillips & Cohen LLP, which represents the whistleblower. The U.S. Department of Justice intervened in the lawsuit against Brookhaven Memorial Hospital of East Patchogue, N.Y, in November 2009.

The False Claims Act allows private citizens to file "qui tam" lawsuits against entities that defraud the government as a way to recover government funds. Whistleblowers are entitled to a reward of 15 percent to 25 percent of the amount the government recovers as a result of the qui tam case when the government intervenes and 30 percent when it doesn't intervene. Kite will get a reward of 21 percent of the Brookhaven settlement.

The federal government has recovered a total of $22 million from seven hospitals named in just Kite's qui tam lawsuit for alleged Medicare fraud involving outlier payments. He also was one of several whistleblowers to bring qui tam lawsuits against four other hospitals; those settled for an additional $22.8 million.

"We are pleased that the federal government has recovered funds that the Medicare program needs," said Larry P. Zoglin, a San Francisco attorney with Phillips & Cohen. "Outlier payments should go only to those hospitals with truly high treatment costs for Medicare patients."

Zoglin commended the work of the Department of Justice, particularly Daniel Spiro, senior trial counsel in the department's Civil Division, on the qui tam cases.

"These cases returned to the government nearly $45 million, and the diligent work of Daniel Spiro was a big reason for that success," said Zoglin.

Six hospitals previously settled the qui tam case brought by Kite:

  • Our Lady of Lourdes Health Care Services Inc., Camden, N.J. ($7.95 million)
  • Cooper University Hospital, Camden, N.J. ($3.85 million)
  • Trinitas Regional Medical Center, Elizabeth, N.J. ($3.02 million)
  • St. Vincent Hospital, Erie, Penn. (settled for $1.9 million)
  • St. Joseph Healthcare System Inc., Paterson, N.J. ( $1.75 million)
  • Capital Health System, Inc., Trenton, N.J. ($750,000)

In addition, Kite was one of several whistleblowers who brought successful qui tam lawsuits against:

  • Warren Hospital, Phillipsburg, N.J. ($7.5 million)
  • Raritan Bay Medical Center, Perth Amboy, N.J. ($7.5 million)
  • Cathedral Healthcare System, Newark, N.J. ($5.3 million)
  • Bayonne Medical Center, Bayonne, N.J. ($2.5 million)

Hagens Berman Sobol Shapiro LLP served as co-counsel on the case against Trinitas, Lourdes, Capital and Brookhaven.

For more information about Phillips & Cohen's record, see P&C's Successful Whistleblower Cases.