The buyer of bankrupt Bayonne (N.J.) Medical Center has agreed to pay $2.5 million to resolve federal False Claims Act allegations that the hospital inflated its charges in order to increase its Medicare outlier payments.
The settlement cleared the way for IJKG Opco, a for-profit Iselin, N.J., corporation, to buy the 210-bed hospital, which filed for Chapter 11 protection in April 2007. The deal calls for IJKG Opco to pay $100,000 and assume an assortment of debt tallying to about $40 million, according to the purchase agreement.
Bayonne was among three New Jersey hospitals the U.S. Justice Department named last month as targets of lawsuits stemming from whistle-blower complaints filed in 2002. The others were 157-bed Robert Wood Johnson University Hospital at Hamilton and 166-bed Barnert Hospital in Patterson. In Bayonnes case, the complaint came from James Monahan, a healthcare consultant who triggered a similar investigation of outlier payments to St. Barnabas Health Care System, West Orange, N.J., which ended with the seven-hospital system agreeing to pay $265 million to resolve the allegations.
The sealed whistle-blower complaint contends that Bayonnes abuse of the outlier program netted the hospital $41 million, according to documents filed in U.S. bankruptcy court. In the agreement with the Justice Department, Bayonne denies the alleged conduct and admits no liability. Monahan is set to receive $400,000 from the Bayonne settlement. -- by Gregg Blesch
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