A Medical Device Daily

St. Joseph Healthcare System (Paterson, New Jersey) has agreed to pay $1.75 million to the federal government to settle a lawsuit that alleged the hospital engaged in Medicare fraud by improperly inflating its reimbursement claims.

The settlement, filed in federal district court, follows a string of other settlements resulting from lawsuits against New Jersey hospitals for allegedly inflating their reimbursement claims to Medicare to receive supplemental, or outlier, payments.

The Medicare program makes outlier payments to hospitals when the actual costs for treating a particular patient greatly exceed a predetermined reimbursement amount for that type of treatment.

"The number of hospitals that have settled these cases in New Jersey makes clear that fraudulent outlier payments have been a drain on the Medicare program," said Larry Zoglin, an attorney with Phillips & Cohen (San Francisco), which is representing the whistleblower.

The lawsuit against St. Joseph's Hospital was filed in 2005 in U.S. District Court in Newark, New Jersey, by Anthony Kite, an independent hospital consultant in New Jersey.

The suit alleged that St. Joseph's submitted reimbursement claims to Medicare that exceeded its actual treatment costs so that it would receive outlier payments.

Cooper University Hospital (Camden, New Jersey) paid $3.85 million last month to settle a similar lawsuit brought by Kite. The hospital consultant also was one of several whistleblowers who filed lawsuits alleging outlier fraud by other New Jersey hospitals.

The hospitals that have settled those cases involving outlier payments included Warren Hospital (Phillipsburg, New Jersey), paying $7.5 million; Bayonne Medical Center (Bayonne, New Jersey), paying $2.5 million; Cathedral Healthcare System (Newark, New Jersey), paying $5.3 million; and Raritan Bay Medical Center (Perth Amboy, New Jersey), paying $7.5 million.

In other legal news, Orthopedic Development (OD; Clearwater, Florida), maker of the TruFUSE spinal surgery system, has accused a rival of infringing both the patent and trade dress for a drill guide in one of the first patent design suits to be filed since the U.S. Circuit Court of Appeals handed down its standard-altering "Egyptian Goddess" ruling.

OD lodged the suit, as well as a motion for a preliminary injunction, in U.S. District Court for the Middle District of Florida, alleging that the design of NuTech Medical's (Birmingham, Alabama) NuFix drill is substantially the same as its own.

The complaint describes the patented instrument as "an elongated hollow metal tube with a handle at one end and a number of teeth, including two large opposed teeth, as the opposite end."

The drill guide is part of a system used to treat facet joint disorders, or the degenerative conditions such as osteoarthritis, the complaint says. According to the suit, the drill guide allows the surgeon to maneuver the drill to the proper vertebrae area for treatment.

The U.S. Patent and Trademark Office issued the patent for the drill guide on Aug. 8. ODC makes and markets the surgery system through minSURG, a wholly owned subsidiary, according to the suit.

In the complaint, ODC accuses NuTech of infringing the '495 patent by making, using and selling its NuFix drill guide and by distributing it to hospitals and surgeons.

OD seeks a preliminary and permanent injunction to enjoin NuTech from future infringement and from passing off its goods or services as ODC's.