News and Press Releases

New jersey hospital pays approximately $9 million to resolve allegations of improper billing for inpatient services

June 21, 2012


NEWARK, N.J. – AHS Hospital Corp., Atlantic Health System Inc. and Overlook Hospital (AHS) have agreed with the U.S. Attorney’s Office for the District of New Jersey and the Department of Justice to pay the United States $8,999,999 to settle allegations that the companies violated the False Claims Act.

First Assistant U.S. Attorney J. Gilmore Childers; Acting Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery; and Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services announced the settlement, which was unsealed today.

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

“We expect hospitals that participate in Medicare will bill for their services accurately and honestly,” said Acting Assistant Attorney General Delery. “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 Inspector General Levinson. “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.”

The government contends that during the period from Jan. 1, 2002, through July 31, 2009, Overlook Hospital – located in Summit, N.J. – fraudulently billed Medicare for services provided to patients which under applicable laws, regulations, guidelines and policies, were ineligible for reimbursement as inpatient services and should have been submitted as less-costly outpatient services.

The civil settlement agreement is between the United States of America – acting through the United States Department of Justice and on behalf of the Office of Inspector General of the United States Department of Health and Human Services (HHS OIG) – and AHS. In resolution of the government’s civil and administrative claims, AHS has agreed to pay $8,999,999 to the United States and to enter into a Corporate Integrity Agreement with HHS OIG designed to prevent future improper billings.

This settlement partially resolves a False Claims Act suit filed by former employees of Overlook Hospital. The whistleblower or qui tam provisions of the False Claims Act permit private individuals, known as relators, to file these actions and share in a portion of the proceeds recovered by the federal government.

First Assistant U.S. Attorney Childers credited special agents of HHS OIG, under the direction of Special Agent in Charge Susan A. Frisco of the New Jersey Regional Office, for the investigation leading to today’s settlement.

The government is represented by Assistant U.S. Attorney David Dauenheimer of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, and Trial Attorney Jennifer Koh of the Department of Justice’s Commercial Litigation Branch.

The claims settled by this agreement are allegations only; there have been no admissions of liability.


Defense counsel: Jesse A. Witten Esq. Washington, D.C.; Stephen Sepaniak Esq., Florham Park, N.J.

AHS Stipulation and Settlement

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