New Jersey Hospital to Pay $3 Million to Resolve Allegations of Medicare Fraud

The United States has entered into a settlement with a New Jersey hospital and filed a motion to intervene in a lawsuit against a New York hospital involving allegations that the hospitals defrauded Medicare, the Justice Department recently announced.

The United States settled for $3.02 million, plus interest, with Trinitas Regional Medical Center in Elizabeth, N.J. The United States is also seeking to intervene in a lawsuit brought against Brookhaven Memorial Hospital in East Patchogue, N.Y.

Both of the hospitals are defendants in a suit brought by a whistleblower, Tony Kite, in 2005. The lawsuit involved allegations that the hospitals fraudulently inflated their 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 ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs. The lawsuit alleged that the hospitals inflated their charges to obtain supplemental outlier payments for cases that were not extraordinarily costly and for which outlier payments should not have been paid.

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

"This office is determined to protect the integrity of the Medicare system for the citizens of New Jersey and of the United States," said U.S. Attorney Paul J. Fishman.

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 settlements announced, Kite will receive roughly $679,000, plus interest, out of the total recovery against Trinitas Regional Medial Center.

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