Feds Settle $2 million Medicaid Fraud Case with NJ Hospital

John Commins, for HealthLeaders Media , June 10, 2009

The University of Medicine and Dentistry of New Jersey will pay the federal government $2 million to settle a whistleblower lawsuit alleging that it bilked Medicaid in a double-billing scheme that went on for nearly a decade, according to the Justice Department.

From 1993 to 2004, UMDNJ's University Hospital in Newark submitted claims to Medicaid for outpatient physician services that were also being billed by doctors in the hospital's outpatient centers, DoJ says.

"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," says Tony West, assistant attorney general for the Justice Department's Civil Division, in a media release announcing the settlement.

The case against UMDNJ and University Hospital originated in a whistleblower suit filed by Steven Simring, MD. The double billing was also the subject of a criminal complaint filed against UMDNJ by the U.S. Attorney's Office in New Jersey in 2005. Under a deferred prosecution agreement, the state of New Jersey recouped $4.9 million from University Hospital, half of which was to be returned to Medicaid.

After this week's agreement, UMDNJ will pay another $2 million to the federal government to settle the civil false claims act allegations. The total federal recovery when combined with the previous payment is $4.45 million. Simring will receive $801,000 as his share of the total federal recovery.

The federal government loses tens of billions of dollars lost each year in Medicare/Medicaid fraud. At a joint press conference last month, US Attorney General Holder and HHS Secretary Kathleen Sebelius announced the creation of a new interagency effort, the Health Care Fraud Prevention and Enforcement Action Team, and the expansion of Medicare "strike force" teams, now operating in Miami and Los Angeles, to Detroit and Houston.

"We cannot and will not allow billions of dollars to be stolen from Medicare and Medicaid through fraud, waste and serious abuse of the system," Sebelius said at the May 20 announcement. "It’s time to bring the fight against fraud into the 21st century and put the resources on the streets and out into the community to protect the American taxpayers and lower the cost of healthcare."

John Commins is a senior editor with HealthLeaders Media.

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