Go the federal Department of Justice website (www.usdoj.gov), and you can read how the largest health care system and second largest employer in New Jersey agreed to pay $265 million to resolve a qui tam lawsuit’s allegations in of defrauding Medicare. Click here for the web page. The agreement could also mean huge rewards for the three whistleblowers who started the whole thing. As part of the settlement, St. Barnabas Care System entered into a corporate compliance agreement with the government to ensure compliance with Medicare regulations and policies. And the lawsuits suggest that other undisclosed hospitals may also have been named as defendants.
The qui tam (whistleblower) cases involved a supplemental Medicare payment system known as “outliers.†Medicare provides outlier payments to hospitals to give them an incentive to treat Medicare inpatients whose care requires unusually high costs. The whistleblowers alleged St. Barnabas inflated those costs from 1995 to 2003 to increase its outlier payments. In June, St. Barnabas agreed to pay the federal government $265 million to settle the allegations but did not admit any wrongdoing. According to the Department of Justice, St. Barnabas overcharged Medicare by at least $630 million between 1995 and 2003.
This case illustrates the power of qui tam lawsuits. The St. Barnabas settlement resolved allegations that were filed in two separate federal lawsuits brought by three “whistleblowers†under the federal False Claims Act. The False Claims Act permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant.
Qui Tam cases are typically filed “under seal†and promptly referred to the local United States Attorney so the Justice Department can weigh whether to intervene in the action. Although not always assured of an award, whistleblowers can stand to profit by millions of dollars for initiating the action.
