UMDNJ settles suit for $2 million, and no CIA
The recent settlement by the University of Medicine and Dentistry of New Jersey (UMDNJ) in Newark has some legal experts concluding that the hospital ended up with a relatively light punishment considering the extent of the alleged billing fraud and the long, contentious litigation that was prompted by a whistle-blower lawsuit.
For one thing, the hospital's settlement with the U.S. Justice Department does not require a corporate integrity agreement (CIA), which could have resulted in years of burdensome oversight. But even so, the hospital isn't getting off scot-free. UMDNJ has agreed to pay the federal government $2 million to resolve allegations it defrauded Medicaid, according to a settlement announced recently by the U.S. Justice Department in Washington, DC. UMDNJ already had paid the state of New Jersey $4.9 million to resolve a criminal complaint about double-billing. The state then returned half of that money to the federal Medicaid program. The additional $2 million settlement will end the federal government's attempt to recoup the money it believed the hospital obtained improperly, says Tony West, JD, assistant attorney general for the Justice Department's Civil Division in Washington, DC.
"Today's settlement demonstrates that the Department of Justice will not tolerate fraud on our Medicaid programs, which were created to serve our nation's low-income families, children, and seniors," West says. "We will continue to work with our partners at the Department of Health and Human Services' Inspector General's Office to protect the integrity of our public health programs."
UMDNJ was accused of double-billing Medicaid. The Justice Department alleged that the hospital submitted claims to Medicaid between 1993 and 2004 for outpatient physician services that also were being billed by doctors working for UMDNJ.
UMDNJ's problems came to the attention of prosecutors through a series of qui tam lawsuits brought by former employees. Those cases resulted in payouts in addition to the university's settlements with state and federal prosecutors. In the most recent case, a jury awarded $349,000 on April 9, 2009, to Carol Caprarola of Chatham, NJ, who had worked as a government affairs coordinator at the university. She had claimed that she lost her job after she cooperated with a criminal investigation into the school's practice of making illegal political contributions.
The jury agreed Caprarola had been passed over for a promotion in January 2006 after testifying before a federal grand jury, and after portions of a memo she wrote criticizing the university appeared in a local newspaper, but the jury did not find she lost her $74,641-a-year job in retaliation for her whistle-blower actions. About 100 people were terminated by the university around the same time as Caprarola's firing, according to court testimony.
UMDNJ is widely respected as a top producer of minority health professionals, the nation's largest free-standing public health sciences university with more than 5,500 students attending the state's three medical schools, its only dental school, a graduate school of biomedical sciences, and a school of health-related professions. But the university has been embroiled in the double-billing and qui tam litigation for several years.
The university was placed under the scrutiny of a federal monitor, former federal Judge Herbert J. Stern, JD, who was appointed by U.S. Attorney Christopher J. Christie after the first allegations of Medicaid fraud surfaced in December 2005. In December 2006, the institution was hit with a lawsuit from a former executive who claims he was forced out because he helped uncover allegedly illegal financial practices. Five other lawsuits already had been filed against UMDNJ in 2006, all of them disputed by the university. In one of the more significant lawsuits, James Lawler, former chief financial officer at UMDNJ's University Hospital in Newark, claimed that university officials tried to coerce him into signing a fraudulent and illegal Medicare report and forced him to quit his job when he refused to cooperate.
$2 million settlement considered small
Considering all the allegations and the years of federal oversight that preceded it, the $2 million settlement is surprisingly small, says Ken Nolan, JD, a health care fraud attorney with the law firm of Nolan & Auerbach in Fort Lauderdale, FL, that specializes in representing qui tam plaintiffs.
"It is a small settlement, and surprisingly does not appear to include a corporate integrity agreement," he says. "This settlement should have little effect on UMDNJ other than the payment of the $2 million. There may be other investigations out there that we do not know about, however."
Despite the relatively small settlement, Nolan says the outcome should hold lessons for risk managers. As the situation at UMDNJ unfolded through the years of litigation, Nolan says it became clear that the risk managers and other leaders at the university should have known about the internal problems long before they came to the attention of prosecutors.
"News reports have indicated that UMDNJ had knowledge of false billing for years before the government began its investigation. The lesson to be learned for risk managers is that in order to protect patients and the hospital, be open to communication from employees and others with knowledge, even if it means listening to bad news, investigating it, and dealing with it," Nolan says. "It is less expensive to address the information internally and correct the problems early, even if it means self-disclosing. Once caught, the hospital's options are very limited. Besides, it is ethical and right to do so."
Nolan predicts that we may soon see an increase in the prosecution of Medicaid and Medicare fraud. The Department of Justice's recent crackdown on Medicaid and Medicare fraud is due to the Obama administration's recognition that fraud and abuse is rampant and that recouping some of the money lost to fraud and abuse is one way to bring down the enormous growth in federal spending in the two programs, Nolan says.
"As the Medicare and Medicaid systems depend upon honest and accurate billing by health care providers, these types of recoveries are reminders to hospitals and other health care providers that it may take a while, but in time, fraud will be uncovered and can get very expensive at that point," he says.
Nolan suggests that risk managers take the UMDNJ experience as a case study in just how badly billing fraud can blow up in your face. Don't be fooled by what seems like a relatively light penalty in the end, he says. The real cost to UMDNJ, he says, came in the form of years of bad publicity, damage to its image that will take many years or even decades to repair, total cash payouts in the millions, and years of costly litigation that drew focus away from the university's mission. Don't let your own organization fall into that abyss, Nolan warns.
"We are approaching a very charged intersection. Awareness about the success of the False Claims Act and its qui tam provisions is at an all-time high. At the same time, new areas of health care fraud are emerging at the same time that providers are paying for enforcement actions related to the old areas, in increasing numbers," Nolan says.
In fiscal year 2008, the last period for which statistics are available, the Department of Justice reported that there were a whopping 228 health care fraud qui tam cases, and more than $966 million in recoveries in health care fraud qui tam cases during the same period.
"While the old areas of fraud will continue, new areas will include false billing for hospital pass-through drugs and equipment/devices and fraud issues with biological products," Nolan says.
Source
For more information on the UMDNJ settlement and qui tam cases, contact:
Ken Nolan, JD, Partner, Nolan & Auerbach, Fort Lauderdale, FL. Telephone: (800) 372-8304.
The recent settlement by the University of Medicine and Dentistry of New Jersey (UMDNJ) in Newark has some legal experts concluding that the hospital ended up with a relatively light punishment considering the extent of the alleged billing fraud and the long, contentious litigation that was prompted by a whistle-blower lawsuit.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content