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Parent Company of Two New Jersey Hospitals to Pay U.S. $7.95 Million to Settle False Claims Act Allegations

Wednesday, December 16, 2009 Health Insurance News J E 4
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WASHINGTON, Dec. 15 Our Lady of Lourdes Health Care Services Inc., the parent company of two New Jersey hospitals, has agreed to pay the United States $7.95 million to resolve allegations that the hospitals defrauded Medicare, the Justice Department announced today. The two hospitals are Our Lady of Lourdes Medical Center (OLL) in Camden, N.J., and Lourdes Medical Center of Burlington County (LMC) in Willingboro, N.J.

LMC is a defendant in a suit brought by a whistleblower, Tony Kite, in 2005. The lawsuit alleged that the hospital fraudulently inflated its charges to Medicare patients to obtain enhanced reimbursement from Medicare. In addition to its standard payment system, Medicare provides supplemental reimbursement, called "outlier payments," to hospitals and other health care providers in cases where the cost of care is unusually high. Congress enacted the supplemental outlier payments system to give hospitals the incentive to treat inpatients whose care requires unusually high costs. The lawsuit alleged that the hospital inflated its charges to obtain supplemental outlier payments for cases that were not extraordinarily costly and for which outlier payments should not have been paid.

The United States conducted a separate investigation of OLL. The government alleged, as a result of that investigation, that the hospital also wrongfully obtained excessive outlier payments.

"As the settlement announced today demonstrates, the Department of Justice is committed to pursuing those who defraud Medicare and drive up the costs of health care," said Assistant Attorney General Tony West, head of the Civil Division of the Department of Justice. Assistant Attorney General West noted that this settlement was the result of the coordinated efforts of the Justice Department's Civil Division, the U.S. Attorney's Office for the District of New Jersey, the Department of Health and Human Services Office of Inspector General and the Centers for Medicare and Medicaid Services, and the Federal Bureau of Investigation.

"This office is committed to protecting the Medicare Trust Fund from fraud and abuse," said Paul J. Fishman, U.S. Attorney for the District of New Jersey.

Mr. Kite brought his suit under the qui tam or whistleblower provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Under the civil settlement announced today, Mr. Kite will receive $356,000, plus interest, out of the Our Lady of Lourdes Health Care Services settlement.

SOURCE U.S. Department of Justice
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