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United States Joins False Claims Act Cases Against Three New Jersey Hospitals

WASHINGTON – The United States has intervened against three New Jersey hospitals in two whistleblower lawsuits alleging that the hospitals defrauded Medicare, the Justice Department announced today. The three hospitals are Robert Wood Johnson University Hospital at Hamilton, Barnert Hospital in Paterson, and Bayonne Hospital.

Both whistleblower lawsuits allege that the three hospitals fraudulently inflated their charges to Medicare patients to obtain enhanced reimbursement from Medicare. In addition to its standard payment system, Medicare provides supplemental reimbursement, called “outlier payments,” to hospitals and other health care providers in cases where the cost of care is unusually high. Congress enacted the supplemental outlier payment system to ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs.

Peter Salvatori, Sara C. Iveson and James T. Monahan filed their lawsuits in 2002 under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens with knowledge of financial fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Mr. Salvatori and Ms. Iveson sued Robert Wood Johnson University Hospital at Hamilton and Barnert Hospital. Mr. Monahan brought suit against Robert Wood Johnson and Bayonne Hospital. Two of the hospitals, Barnert Hospital and Bayonne Hospital, have filed for Chapter 11 bankruptcy protection.

The United States’ investigations of Robert Wood Johnson, Barnert Hospital and Bayonne Hospital were the result of a coordinated effort among the Justice Department ‘s Commercial Litigation Branch in the Civil Division; the U.S. Attorney’s Office for the District of New Jersey, Affirmative Civil Enforcement Unit; the U.S. Attorney’s Office for the Eastern District of Pennsylvania; the Department of Health and Human Services, Office of Inspector General and Office of Counsel to the Inspector General; the Centers for Medicare and Medicaid Services; and the Federal Bureau of Investigation.