A Medical Device Daily

Warren Hospital (Phillipsburg, New Jersey) has agreed to pay the U.S. $7.5 million to settle allegations that it defrauded the Centers for Medicare & Medicaid Services (CMS; Baltimore), the Department of Justice said. The settlement resolves allegations that the hospital improperly increased charges to Medicare patients in order 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 payment system to ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs.

The Justice Department alleged that, between January 1999 and August 2003, Warren purposefully inflated charges for inpatient and outpatient care to make these cases appear more costly than they actually were, and thereby obtained outlier payments from CMS that it was not entitled to receive.

The settlement also resolves claims that the hospital violated CMS’s anti-self-referral statute, known as the Stark law, which prohibits claims for CMS patients referred by physicians with whom a hospital has an unlawful financial relationship.

“Today’s settlement demonstrates that the Department of Justice is committed to protecting the Medicare program from overcharging and to assuring that patients receive medical care only on the basis of their actual medical need,” said Jeffrey Bucholtz, acting assistant attorney general for the Justice Department’s Civil Division.

The civil settlement agreement resolves allegations against Warren that were filed in two separate federal lawsuits brought by “whistleblowers” under the federal False Claims Act. The False Claims Act permits private citizens to bring lawsuits on behalf of the U.S.

Under the settlement, Peter Salvatori and Sara Iveson, the relators in the first of the two lawsuits filed against Warren, will share 16% of the total recovery, or $1.2 million.

Warren Hospital also has entered into a Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General. The Corporate Integrity Agreement contains measures to ensure compliance with Medicare regulations and policies in the future.

In other legalities:

• Diomed Holdings (Andover, Massachusetts) a developer of minimally invasive medical technologies, including its patented EndoVenous Laser Treatment (EVLT) for varicose veins, repored that on Dec. 7, Judge Maxine Chesney of the U.S. District Court for the Northern District of California held a status conference relating to the patent infringement lawsuit filed by VNUS Medical Technologies(San Jose, California) against Diomed and its co-defendants, Angio-Dynamics (Queensbury, New York) and Vascular Solutions (Minneapolis). No trial date was set during the conference.

The trial, originally scheduled to commence on Oct. 29, had been delayed based on a conflict in the court’s schedule. A further status conference has been set for Jan. 11, 2008, at which time the judge may set a trial date or may defer doing so until later.

• Novo Nordisk (Princeton, New Jersey) reported the company has settled a lawsuit against Pfizer (New York) claiming that Pfizer’s product Exubera infringed patents owned by Novo Nordisk. The patents cover inhaled insulin treatment for diabetes.

The lawsuit was originally filed in August 2006 in U.S. Federal Court in the Southern District of New York.