New Jersey Hospital Settles Anti-Kickback Qui Tam Case for $12.5 Million; Case Alleged Cardiologists Were Compensated $18,000 Per Year to Serve on Advisory Board That Was Actually Tied to Patient Referrals

On January 24, 2013, the U.S. Attorney’s Office for the State of New Jersey unsealed a $12.5 Million Dollar settlement with Cooper Health System, headquartered in the Camden, New Jersey area, but serving regions of New Jersey, Pennsylvania and Delaware. The settlement was the result of cardiologist Nicholas DePace’s whistleblower qui tam lawsuit, which alleged that the government had been defrauded.
The case arose out of an arrangement where cardiologists were paid $18,000 per year to sit on an advisory board. The physicians were paid to sit on the board from 2004 until 2010. Under the participating physicians’ “consulting” and “compensation” agreements, they were required to attend at least four board meetings per year to receive the $18,000 payment. The complaint alleged that these physicians did little “advising” on the advisory board, and simply listened to lectures at the meetings.
In his qui tam complaint, DePace alleged that the hospital violated the Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), Federal “Stark Law” (42 U.S.C. § 1395nn), the New Jersey Anti-Kickback Statute (N.J.S.A. 30:4D-14(c)), and New Jersey’s physician self-referral law (N.J.S.A. 45:9-22.4, et seq., or the “Codey Law”). The U.S. Attorney’s office alleged that Cooper’s payments to physicians sitting on the board were at least in part to compensate them for their referrals of patients to the hospital, and that some of those patients were Medicare or Medicaid recipients. Dr. DePace was paid $2.39 Million from the United States and New Jersey for reporting the claims.
The $12.6 Million Dollar settlement will have a significant financial impact on the Camden-based healthcare system, which posted a 2012 11-month operating income of $13 Million, according to financial disclosures.

The attorneys at The Health Law Partners have a significant amount of experience in the areas of Stark and Anti-Kickback compliance, as well as defense of health care fraud investigations and qui tam cases. For more information regarding such matters, please contact Adrienne Dresevic, Esq. or Alan Gilchrist, Esq. at (248) 996-8510 or adresevic@thehlp.com or agilchrist@thehlp.com.