Cabrini Medical Center, New York, became the third hospital implicated in an alleged kickback-for-referrals scheme involving Applied Consulting, New York. The U.S. attorney's office in New York joined a whistle-blower lawsuit alleging that 336-bed Cabrini paid the firm $72,000 per month from 1995 to 2000 for referrals to the medical center's alcohol- and substance-abuse programs, disguising the kickbacks as administrative fees. Cabrini said it would contest the civil complaint. The hospital said that it had a contract with Applied Consulting that ended in 1999, but it "strongly" disagreed "with the government's characterization of the facts." In September, Applied Consulting agreed to pay $2.75 million, without admitting wrongdoing, to settle allegations that it entered illegal patient-referral schemes with hospitals. Earlier this year, Mount Vernon (N.Y.) Hospital and Catskill Regional Medical Center, Harris, N.Y., agreed to pay a combined $4.15 million to settle related charges, also without admitting wrongdoing.
In other legal news, nine-hospital St. Barnabas Health Care System, West Orange, N.J., paid $3.87 million to resolve civil allegations that some of its hospitals' upcoded pneumonia diagnoses and billed Medicare for inpatient services actually provided on an outpatient basis from 1992 to 1999. The system did not admit wrongdoing. St. Barnabas said it fully cooperated with the government and that the settlement mainly involved issues at various hospitals before they joined the system. St. Barnabas, which reportedly is discussing a possible acquisition of a hospital in Montclair, N.J., drew attention in 2003 as one of the largest receivers of Medicare outlier payments. The CMS is said to be continuing to investigate whether hospitals illegally maximized outlier payments before the agency reformed the payment system. So far, the probe has not resulted in any public charges or settlements. A St. Barnabas spokeswoman said the system has made no outlier repayments and has none pending. -- by Mark Taylor