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Somerset Medical Center Pays $435,640 To Resolve Kickback Allegations

Press release provided by United States Attorney District of New Jersey. 

NEWARK, N.J. – Somerset Medical Center – a regional medical center located in 
Somerville, N.J. – has paid $435,640 to settle allegations that it violated the federal False Claims Act by making improper rental payments to a cardiology group that referred large numbers of patients to the hospital, New Jersey U.S. Attorney Paul J. Fishman announced today. 
 
The civil settlement agreement is between the United States of America – acting through the U.S. Attorney’s Office for the District of New Jersey and on behalf of the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) – and Somerset Medical Center. 

“Making inflated rental payments to induce referrals is no better than slipping a doctor an envelope stuffed with cash,” U.S. Attorney Fishman said. “Kickback arrangements undermine the physician-patient relationship and can lead to unnecessary treatment and higher costs. There is no room in our healthcare system for hospitals that abuse federal health care programs to boost 
their bottom line.” 

“Today’s settlement reaffirms our commitment to investigate all matters relating to kickbacks and inducements, which have no place in the healthcare arena,” Special Agent in Charge Tom O’Donnell from the U.S. Department of Health and Human Services Office of Inspector General said. 
 
According to the contentions of the United States contained in the settlement agreement: 
 
From Oct.1, 2006, to Sept. 30, 2013, Somerset paid Medicor Cardiology, a practice based in Hillsborough, N.J., rental amounts that were above fair market value for the leased space. The cardiology practice was a significant source of patient referrals to Somerset.
 
At least one purpose of the payments was to induce the referral of patients to Somerset, and they were successful. Somerset’s subsequent billings of the Medicare program for services resulting from those tainted referrals were therefore false claims in violation of federal anti-kickback and self-referral laws. 

Somerset has agreed to pay $435,640, which includes interest, to the United States to settle the federal civil claims. The settlement resolves allegations against Somerset in a False Claims Act suit that was brought by two former Somerset employees, a physician and an administrator. 
 
The whistleblower – or qui tam – provisions of the federal False Claims Act permit private individuals, known as relators, to file such whistleblower actions and share in a portion of the proceeds recovered by the federal government. 
 
U.S. Attorney Fishman credited special agents of HHS-OIG, under the direction of 
Special Agent in Charge O’Donnell, for the investigation leading to today’s settlement. 

The government is represented by Assistant U.S. Attorney Charles Graybow of the U.S. Attorney’s Office Health Care and Government Fraud Unit. 
The claims settled by these agreements are allegations; there have been no admissions of liability. 
 
U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $535 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

SOMERSET MEDICAL CENTER STATEMENT

Somerset Medical Center  confirms that it has settled a claim with the United States Attorney’s Office for the District of New Jersey and the Office of the Inspector General of the United States Department of Health and Human Services.  The settlement resolves allegations that the medical center improperly paid $2.25 per square foot above market rent for a facility in Hillsborough, New Jersey over a seven year period.  Somerset Medical Center did not admit liability or wrongdoing but agreed to pay $431,526.00 to resolve the matter with the government and avoid  litigation costs.

Somerset Medical Center had cooperated fully with the government’s investigation which arose out of civil litigation filed in September 2009 by two individuals formerly affiliated with Somerset Medical Center.   As part of the settlement, that litigation has been dismissed with prejudice.  

 Somerset Medical Center takes its obligations to comply with all state and federal statutes and regulations very seriously.  The institution has devoted more resources to enhance its compliance function and oversight.  None of the allegations in the now dismissed litigation relate to the appropriateness or quality of care rendered to patients at Somerset Medical Center.  Somerset Medical Center continues to be at the forefront of providing innovative and quality care to its patients using state of the art techniques, facilities and equipment.

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