Saint Barnabas Corp., a New Jersey hospital chain, will pay $265 million to settle a pair of whistleblower lawsuits. The allegations were that it had systematically inflated charges to Medicare patients in order to obtain enhanced reimbursements. The massive settlement by the largest health care system in New Jersey and second largest employer in the state may be the first in a series other to come. Numerous other hospitals are apparently facing similar accusations and they will have great difficulty in defending their practices.

In the suits, brought by whistleblowers, it was claimed that Saint Barnabas was abusing a Medicare provision that provides for supplemental payments for unusually expensive cases, referred to as “outliers.” Justice Department lawyers reported that between October 1995 and August 2003, the nine hospitals operated by West Orange, New Jersey-based Saint Barnabas “purposefully inflated charges for inpatient and outpatient care to make these cases appear more costly than they actually were.” As you may already know, whistleblower lawsuits, also known as qui tam actions, allege claims under the False Claims Act. Initially, such cases are filed under seal and immediately referred to the local U.S. Attorney in order to give the Justice Department the option of pursuing the case.

Health care providers should never intentionally overcharge the Medicare program, but it appears the practice is widespread. Saint Barnabas entered into a “corporate integrity agreement” in which it promised to take a series of steps to ensure compliance with Medicare regulations and policies in the future. The suit had been filed in U.S. District Court in Philadelphia on behalf of two whistleblowers. A similar suit was filed in U.S. District Court in New Jersey on behalf of a third person.

These suits, filed in November 2002, sparked a massive federal investigation involving both the Philadelphia and New Jersey U.S. Attorney’s offices; the Justice Department’s Civil Division in Washington, D.C.; the FBI; the Department of Health and Human Services’ Office of Inspector General; the Centers for Medicare and Medicaid Services; and the U.S. Postal inspectors. It should be noted that whistleblowers are responsible for uncovering a great deal of fraud committed against the federal government. For years, until people started using the False Claims Act, much of this fraud went unreported. Now some powerful lobby groups are trying to stop whistleblower lawsuits. Hopefully, they will fail.

Source: The Legal Intelligencer

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