New Jersey Regional Medical Center Pays Hundreds Of Thousands To Resolve Kickback Allegations

NEWARK, N.J. – Somerset Medical Center – a regional medical center located in Somerville, N.J. – has paid $435,640 to settle allegations that it violated the federal False Claims Act by making improper rental payments to a cardiology group that referred large numbers of patients to the hospital, New Jersey U.S. Attorney Paul J. Fishman announced today.

The civil settlement agreement is between the United States of America – acting through the U.S. Attorney’s Office for the District of New Jersey and on behalf of the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) – and Somerset Medical Center.

“Making inflated rental payments to induce referrals is no better than slipping a doctor an envelope stuffed with cash,” U.S. Attorney Fishman said. “Kickback arrangements undermine the physician-patient relationship and can lead to unnecessary treatment and higher costs. There is no room in our healthcare system for hospitals that abuse federal health care programs to boost their bottom line.”

“Today’s settlement reaffirms our commitment to investigate all matters relating to kickbacks and inducements, which have no place in the healthcare arena,” Special Agent in Charge Tom O’Donnell from the U.S. Department of Health and Human Services Office of Inspector General said.

According to the contentions of the United States contained in the settlement agreement:

From Oct.1, 2006, to Sept. 30, 2013, Somerset paid Medicor Cardiology, a practice based in Hillsborough, N.J., rental amounts that were above fair market value for the leased space. The cardiology practice was a significant source of patient referrals to Somerset.

At least one purpose of the payments was to induce the referral of patients to Somerset, and they were successful. Somerset’s subsequent billings of the Medicare program for services resulting from those tainted referrals were therefore false claims in violation of federal anti-kickback and self-referral laws.

 Somerset has agreed to pay $435,640, which includes interest, to the United States to settle the federal civil claims. The settlement resolves allegations against Somerset in a False Claims Act suit that was brought by two formerSomerset employees, a physician and an administrator.

The whistleblower – or qui tam – provisions of the federal False Claims Act permit private individuals, known as relators, to file such whistleblower actions and share in a portion of the proceeds recovered by the federal government.

U.S. Attorney Fishman credited special agents of HHS-OIG, under the direction of Special Agent in Charge O’Donnell, for the investigation leading to today’s settlement.

The government is represented by Assistant U.S. Attorney Charles Graybow of the U.S. Attorney’s Office Health Care and Government Fraud Unit.

The claims settled by these agreements are allegations; there have been no admissions of liability.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $535 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

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Counsel for Somerset Medical Center: Jack Wenik Esq., Newark
Counsel for Relators: John E. Riley Esq., Philadelphia

Somerset Medical, Executed Settlement Agreement