Healthcare News & Insights

NJ hospital settles kickback allegations to the tune of $12.6 million

While admitting no wrongdoing, Cooper Health System in Camden, NJ,  has agreed to pay $12.6 million to settle illegal kickback allegations from a whistleblower that the hospital violated the state and federal false claims acts.

Specially, the hospital was accused of making improper payments to physicians under “consulting” and “compensation” agreements in its quest to grow its cardiology program.

“Payments to outside physicians by hospitals require heightened scrutiny because those payments may be improper if they are based on patient referrals,” said U.S. Attorney Paul Fishman in press release. “Such kickback arrangements interfere with the physician-patient relationship and can lead to problems of overutilization and increased costs.”

 Whistleblower case

According to the results of the joint investigation, the United States and New Jersey contend that from Oct. 1, 2004, through Dec. 31, 2010, Cooper recruited local outside physicians to serve on the Cooper Heart Institute Advisory Board (CHIAB). Physicians were paid approximately $18,000 a year to attend four meetings over the course of any given year.

It’s alleged that one purpose of the payments was to induce the referral of patients to Cooper, and that subsequent billing to Medicare and Medicaid for services resulting from those referrals were in violation of federal and state anti-kickback and self-referral laws.

Dr. Nicholas DePace was recruited to serve on the advisory board, but said he recognized its potentially unlawful purpose and instead filed a whistleblower lawsuit. The qui tam provisions of federal and state False Claims Acts permit private individuals to file such actions and share in a portion of the proceeds recovered.

For his efforts in the case, Dr. DePace will receive $2.4 million from the proceeds of the settlement.

Admits no wrongdoing

In the resolution of the federal and state civil claims, Cooper has agreed to pay $10,200,000 to the United States and $2,300,000 to the State of New Jersey. In addition, Cooper has agreed to maintain a number of corporate reforms designed to enhance accountability, training and other aspects of its compliance operations. However, the facility has admitted no wrongdoing in the settlement.

John Sheridan, Jr., president and CEO of Cooper University Hospital, had this to say in an e-mailed statement, “After more than three years of extended discussions with government lawyers, we decided, in the best interests of Cooper, to settle our dispute without the admission of wrongdoing to avoid the burdens and uncertainties of a protracted litigation. This allows us to focus our full energies on serving our community.”

Cooper was commended by Attorney General Jeffrey Chiesa for implementing substantial internal reforms and accountability measures designed to address the government’s concerns and avoid any future problems.

Subscribe Today

Get the latest and greatest healthcare news and insights delivered to your inbox.