New Jersey hospital pays $3 million to settle whistleblower case alleging Medicare fraud in outlier payments

Nov. 25, 2009, ELIZABETH, NEW JERSEY - Trinitas Regional Medical Center has agreed to pay $3.02 million to the federal government to settle a "qui tam" (whistleblower) lawsuit that alleged the Elizabeth, N.J., hospital defrauded Medicare by inflating its reimbursement claims to obtain "outlier payments.'

The New Jersey hospital is the seventh hospital to settle allegations about Medicare fraud involving outlier payments exposed by the whistleblower lawsuit. Those supplemental payments are made only in instances where the actual cost of care is much higher than the standard Medicare reimbursement.

The whistleblower, Anthony Kite, is an independent hospital consultant in New Jersey. His qui tam lawsuit was filed in federal district court in Newark, New Jersey, in 2005. The settlement with Trinitas was approved by a federal judge last week. At the same time, the U.S. Department of Justice filed notice that it is intervening in Kite's whistleblower lawsuit against Brookhaven Memorial Hospital of East Patchogue, N.Y.

The federal government has recovered a total of $10.5 million from four whistleblower cases brought by Kite alone involving Medicare fraud and outlier payments. He also was one of several whistleblowers to bring similar lawsuits against other hospitals that settled for a total of $22.8 million.

"Hospitals need outlier payments as an incentive to treat patients whose treatment costs are more than the average case," said Larry Zoglin, a San Francisco attorney with Phillips & Cohen LLP, which represents the whistleblower. "But when they inflate Medicare claims to get outlier payments, they are robbing the Medicare program and taxpayers."

Three hospitals, in addition to Trinitas, have settled qui tam cases brought by Kite:

• Cooper University Hospital, Camden, N.J. ($3.85 million)
• St. Vincent Hospital, Erie, Penn. (settled for $1.9 million)
• St. Joseph Healthcare System Inc., Paterson, N.J. ( $1.75 million)

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 served as co-counsel on the case against Trinitas Hospital.

Phillips & Cohen is the largest and most successful law firm that specializes exclusively in representing whistleblowers in qui tam lawsuits and tax fraud matters. Cases brought by the firm on behalf of whistleblowers have returned more than $5.3 billion to the federal government in civil and criminal recoveries.