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New Jersey Healthcare Consulting Firm to Pay U.S. $2.875 Million to Resolve Allegations of Medicare Fraud

WASHINGTON & NEWARK, N.J. - Besler & Company, Inc., a healthcare consulting firm; and its principal, Philip Besler, have agreed to pay the United States $2.875 million, plus interest, to settle allegations of fraud against the federal Medicare program, the Justice Department announced today.

The settlement resolves allegations that the North Brunswick, N.J. - headquartered company counseled hospital clients to improperly increase charges to Medicare patients in order to obtain enhanced reimbursement from Medicare. In addition to its standard payment system, Medicare pays supplemental reimbursement, called outlier payments, to hospitals 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.

The Justice Department alleged that, between January 2001 and August 2003, Besler & Company advised hospitals to purposefully inflate charges for inpatient and outpatient care to make these cases appear more costly than they actually were, and thereby augment their outlier reimbursements.

"Today's settlement makes clear that the Department of Justice is prepared to protect the Medicare program by seeking redress not only against health care providers who commit fraud but also against anyone who participates in that fraud," said Jeffrey S. Bucholtz, Acting Assistant Attorney General for the Justice Department's Civil Division.

The civil settlement agreement released today resolves allegations against Besler & Company and Mr. Besler that were filed in two separate federal lawsuits brought by "whistleblowers" under the federal False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States. Under the settlement, James Monahan, the whistleblower in the first of the two lawsuits, will receive $460,000 of the total recovery.

"This office is committed to preserving the integrity of the Medicare system within New Jersey against anyone who engages in mischarging, including outside consultants," said Christopher J. Christie, U.S. Attorney for the District of New Jersey.

The settlement was the result of a coordinated effort among the Justice Department's Civil Division, Commercial Litigation Branch; the U.S.Attorney's Office for the District of New Jersey, Affirmative Civil Enforcement Unit; the Department of Health and Human Services, Office of Inspector General; the Centers for Medicare and Medicaid Services; and the Federal Bureau of Investigation.