A federal judge in New Jersey on Tuesday tossed out a class-action lawsuit alleging that St. Barnabas Health Care System effectively stole $514 million from hospitals across the country by hogging Medicares pool of outlier payments.
St. Barnabas, a seven-hospital system based in West Orange, N.J., a year ago agreed to pay $265 million to the federal governmentwithout admitting any wrongdoingto settle whistle-blower lawsuits alleging the system inflated charges to sweeten payments between 1995 and 2003.
A week later 162-bed Longmont (Colo.) United Hospital and 48-bed Maine Coast Memorial Hospital, Ellsworth, Maine, filed a lawsuit contending that they and every other hospital that received outlier payments during those years suffered because HHS maintained the funding as a fixed pie while St. Barnabas allegedly took a bigger slice than it deserved.
Judge Dennis Cavanaugh of the U.S. District Court in Newark found that the hospitals suffered no direct injury.
This decision is very gratifying and a positive development for the St. Barnabas Health Care System, Ellen Greene, a St. Barnabas spokeswoman, said in a written statement.
The plaintiffs lawyer, Hal Hirsch of Greenberg Traurig in New York, said he would appeal the decision.
If you have a gun and you pull a trigger, the bullet can go through the government and hit the hospitalsits just that simple, Hirsch said. Hes saying they get no recovery? It doesnt work that way.
Hirsch also is counsel on a lawsuit in Florida making the same claim against Tenet Healthcare Corp., which agreed to pay $788 million to settle similar allegations in a multipronged agreement with the Justice Department in June 2006. In December a federal judge in Miami declined to grant class-action status to the case, brought by 380-bed Boca Raton Community Hospital. -- by Gregg Blesch