Cathedral Healthcare System, Newark, N.J., has agreed to pay $5.3 million to resolve allegations that it inflated charges to boost its returns from Medicares outlier program. The agreement is the latest yielded by an ongoing series of U.S. Justice Department investigations into alleged abuse of the outlier program triggered by whistle-blower complaints.
In Cathedral Healthcares case, the Justice Department and partner agencies pursued allegations contained in three separate lawsuits filed under the whistle-blower provisions of the False Claims Act, according to a news release from the department. The government contends that the three-hospital system reported inflated charges for the purpose of gaming the outlier formula between 1998 and 2003. Cathedral Healthcare officials did not return calls seeking comment. In the agreement, the system denies the allegations and admits no liability. In January, Catholic Health East, Newtown Square, Pa., said it would acquire the New Jersey system in a deal that involves closing inpatient services at Cathedral Healthcares 110-bed St. James Hospital in Newark.
The Justice Department recently announced similar agreements with 165-bed Warren Hospital in Phillipsburg, N.J., and 278-bed Bayonne (N.J.) Medical Center, and the outlier program was at issue in massive settlements reached with Tenet Healthcare Corp., Dallas, and St. Barnabas Health Care System, West Orange, N.J., in 2006. -- by Gregg Blesch
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