New Jersey Hospital Pays U.s. $8,999,999 to Settle

False Claims Act Allegations

AHS Hospital Corp., Atlantic Health System Inc., and Overlook Hospital, located in New Jersey, have agreed to pay the United States $8,999,999 to settle allegations that they violated the False Claims Act, the Justice Department announced today.

The settlement resolves allegations that Overlook Hospital, owned and operated by AHS Hospital Corporation, and Atlantic Health Systems Inc., overbilled Medicare for patients who were treated on an inpatient basis when they should have been treated as either observation patients or on an outpatient basis.

This settlement partially resolves a False Claims Act suit filed by former employees of Overlook Hospital. U.S. ex rel. Doe et al. v. AHS Hospital Corp., et al., Civ. No. 08-2042 (D.N.J.). The whistleblower or qui tam provisions of the False Claims Act permit individuals, known as relators, to file these actions and share in a portion of the proceeds recovered by the federal government.

“We expect hospitals that participate in Medicare will bill for their services accurately and honestly,” said Stuart F. Delery, Acting Assistant Attorney General for the Department’s Civil Division. “Hospitals have a responsibility to ensure that the Medicare rules are not abused and patients who should be treated as outpatients are not admitted as inpatients, increasing the hospitals’ reimbursements.”

“Billing Medicare for unnecessary inpatient services steals from taxpayers,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services, “Although that’s bad enough, it also requires hospitalizing people who don’t need it, causing inconvenience, discomfort and worse. The size of this settlement underscores the seriousness of the conduct.”

“Proper billing ensures fair compensation and protects Medicare dollars that are much neededfor patient care,” said J. Gilmore Childers , First Assistant U.S. Attorney for the District of New Jersey. “Hospitals taking more than their entitled share of reimbursements, by improperly billing services as more expensive services, subject themselves to federal scrutiny.”

“This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $7.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $11.3 billion.” 

The case was handled by the U.S. Attorney’s Office for the District of New Jersey, the Department of Justice’s Civil Division and the Office of Inspector General of the Department of Health and Human Services.