Jan. 24 (Bloomberg) -- Cooper Health System, a New Jersey hospital, agreed to pay $12.6 million to resolve claims that it paid kickbacks to doctors to build its cardiology program, U.S. Attorney Paul Fishman said.
Cooper settled with the U.S. and New Jersey governments, which joined a physician’s whistle-blower claims that the Camden-based hospital used “consulting” and “compensation” agreements to induce the referral of patients.
From October 2004 to December 2010, Cooper paid outside physicians $18,000 a year to serve on the Cooper Heart Institute Advisory Board and attend four meetings a year, according to Fishman. Cooper’s later billings to the Medicare and Medicaid programs were based on tainted referrals made in violation of federal and state anti-kickback laws, the government said.
“Payments to outside physicians by hospitals require heightened scrutiny because those payments may be improper if they are based on patient referrals,” Fishman said in a statement. “Such kickback arrangements interfere with the physician-patient relationship.”
The case began with the filing of a whistle-blower lawsuit in 2008 by a cardiologist, Nicholas M. DePace, who was recruited to join the advisory board, according to Fishman. He sued under the False Claims Act, which allows whistle-blowers to go to court on behalf of the government and share in any recovery.
Cooper agreed to pay $10.3 million to the U.S. government and $2.3 million to New Jersey. The U.S. will pay DePace $1.95 million and New Jersey will pay him $442,890, according to a settlement agreement filed in federal court in Camden.
After three years of negotiations with the government, Cooper decided “to settle our dispute without the admission of wrongdoing to avoid the burdens and uncertainties of a protracted litigation,” John P. Sheridan Jr., Cooper’s chief executive officer and president, said in a statement.
The case is U.S., New Jersey and DePace v. Cooper Health System, 08-cv-5626, U.S. District Court, District of New Jersey (Camden).
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