False Claims Act - Health System Settles Allegations Related To Payments To Physician Advisors


The U.S. Department of Justice (DOJ) recently issued a press release related to a settlement agreement between the U.S. Attorney's Office for the District of New Jersey, the state of New Jersey and the Cooper Health System (Cooper) that was unsealed on January 24, 2013 (the Agreement). According to the DOJ, Cooper has agreed to pay a total of $12.6 million to the U.S. and New Jersey to resolve allegations that it violated the federal and New Jersey civil false claims acts by submitting claims for cardiology services that resulted from improper payments to cardiologists.

The DOJ alleges that from October 2004 through December 2010, Cooper paid outside physicians approximately $18,000 per year to serve on the Cooper Heart Institute Advisory Board (CHIAB). The CHIAB physicians' duties reportedly involved only minimal effort, including attendance at four meetings per year. According to the DOJ, Cooper intended for the payments to induce the physicians to refer patients to Cooper, and such referrals were realized as a result of the payments. Thus, Cooper allegedly violated the federal and New Jersey anti-kickback and physician self-referral laws, and subsequently, the federal and state false claims acts by submitting claims to the Medicare and Medicaid programs for services resulting from the tainted referrals. The case was initiated by a physician whistleblower who was approached by Cooper to serve on the CHIAB but declined to do so. While Cooper has denied any wrongdoing in this matter, the DOJ press release indicates that Cooper has implemented internal changes to address such misconduct and prevent future issues.

This settlement underscores recent efforts by federal and state government to seriously pursue allegations of false claims violations predicated on conduct that violates the anti-kickback and physician self-referral laws. If you need assistance evaluating arrangements involving physicians that may implicate these laws, please contact Donna S. Clark at dclark@bakerlaw.com or 713.646.1302 or Darby C. Allen at dallen@bakerlaw.com or 713.646.1311.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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