New Jersey hospitals pay $7.95 million to settle Medicare fraud case

CAMDEN, NEW JERSEY, Dec. 15, 2009 -- The owner of two New Jersey hospitals has agreed to pay $7.95 million to the federal government to resolve a whistleblower lawsuit and  separate government charges alleging the hospitals defrauded Medicare by inflating certain charges.

The "qui tam" (whistleblower) lawsuit and the government alleged Our Lady of Lourdes Medical Center in Camden, N.J., and Lourdes Medical Center of Burlington County (LMC) in Willingboro, N.J., inflated their charges to Medicare patients to receive supplemental payments, known as "outlier payments." Both hospitals are owned by Our Lady of Lourdes Health Care Services Inc.

Medicare makes outlier payments to hospitals and other healthcare providers in cases where inpatient treatment is unusually high so that hospitals will treat those expensive patients.

"Outlier payments are an important incentive to get hospitals to treat Medicare patients whose healthcare costs exceed the norm," said Larry P. Zoglin, a San Francisco attorney with Phillips & Cohen, which represents the whistleblower. "Hospitals that view outlier payments as an opportunity to boost their revenues fraudulently are hurting the Medicare program for everyone."

This is the latest Medicare fraud settlement in a series involving fraudulent hospital claims for outlier payments that were exposed by Anthony Kite, an independent hospital consultant in New Jersey. He filed his qui tam lawsuit in 2005 in federal district court in Newark, NJ.

The federal government has recovered more than $40 million from Medicare fraud cases involving outlier payments due to a qui tam lawsuit brought by Kite alone or by Kite and other whistleblowers. The government has recovered funds from:

• 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)
• Cooper University Hospital, Camden, N.J. ($3.85 million)
• Trinitas Regional Medical Center, Elizabeth, N.J. ($3.02 million)
• Bayonne Medical Center, Bayonne, N.J. ($2.5 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)

Hagens Berman served as co-counsel on the qui tam case against Our Lady of Lourdes Medical Center and Trinitas.

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.