A Medical Device Daily

The U.S. has intervened against three New Jersey hospitals in two whistleblower lawsuits alleging that the hospitals defrauded Medicare, the Justice Department reported.

The three hospitals are Robert Wood Johnson University Hospital (Hamilton), Barnert Hospital (Paterson), and Bayonne Hospital (Bayonne).

Both suits allege that the three 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 healthcare providers in cases where the cost of care is unusually high. Congress enacted the supplemental outlier payment system to ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs.

Peter Salvatori, Sara Iveson and James Monahan filed their lawsuits in 2002 under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens with knowledge of financial fraud against the government to bring a lawsuit on behalf of the U.S. and to share in any recovery.

Salvatori and Iveson sued Robert Wood Johnson University Hospital and Barnert Hospital. Monahan brought suit against Robert Wood Johnson and Bayonne Hospital. Two of the hospitals, Barnert and Bayonne, have filed for Chapter 11 bankruptcy protection.

The U.S. investigations of the hospitals were the result of a coordinated effort among the Justice Department’s Commercial Litigation Branch in the Civil Division; the U.S. Attorney’s Office for the District of New Jersey, Affirmative Civil Enforcement Unit; the U.S. Attorney’s Office for the Eastern District of Pennsylvania; the Department of Health and Human Services, Office of Inspector General and Office of Counsel to the Inspector General; the Centers for Medicare and Medicaid Services; and the Federal Bureau of Investigation.