Healthcare Business News

N.J. system pays $12.6 million to settle whistle-blower case

By Joe Carlson
Posted: January 26, 2013 - 12:01 am ET

Cooper Health System in Camden, N.J., has agreed to pay $12.6 million to settle whistle-blower allegations that it inappropriately encouraged cardiologists to refer patients to its hospitals by paying them $18,000 a year to serve on a local advisory board.

The system, which operates 493 beds among two hospitals, agreed to pay the Justice Department $10.2 million and the state of New Jersey $2.3 million for alleged violations of the state and federal false claims acts, which prohibit hospitals from paying doctors to refer patients to their facilities for treatment.

Whistle-blower Dr. Nicholas DePace, who filed the case after he was recruited to serve on the advisory board, will receive $2.4 million from the proceeds of the settlement, the settlement agreement says (PDF).

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Executive Assistant New Jersey Attorney General John Hoffman said in a news release, “Cooper has taken responsibility for its past misconduct.”

However, an e-mailed statement (PDF) from Cooper University Hospital President and CEO John Sheridan Jr., said the system was not admitting wrongdoing in the settlement, but rather ending the case after a three-year investigation “to avoid the burdens and uncertainties of a protracted litigation.”

DePace's lawsuit accused Cooper of recruiting physicians to serve on the Cooper Heart Institute Advisory Board between 2004 and 2010. The positions required the doctors to attend four meetings a year in exchange for the payments, but federal officials alleged that the roles were partly intended to induce referrals, in violation of federal laws against kickbacks and self-referrals.

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