False Claims Act Suit Against NJ Hospital Results in $7.5 Million Settlement

Phillipsburg, NJ-based hospital system Warren Hospital has agreed to settle False Claims Act allegations against it by paying $7.5 million to the U.S. government. Warren Hospital was charged with committing fraud against the federal Medicare program from January 1998 until August 2003 by intentionally increasing patient charges so that the hospital could claim supplemental reimbursement from Medicare.

By increasing patient charges — without increasing patient care — the hospital system created the impression that it was treating patients who needed care with unusually high costs, cases referred to in the Medicare system as “outliers.” Medicare will provide supplemental payments for legitimate outliers to provide an incentive for hospitals to treat these patients despite the high cost of care.

Two separate whistleblowers came forward with information that Warren Hospital was improperly increasing patient charges to claim these supplemental payments from Medicare. They brought False Claims Act lawsuits against the hospital system on behalf of the United States. Under the settlement and the provisions of the False Claims Act, these two whistleblowers are entitled to 16 percent of the settlement — a total of $1.2 million — for coming forward to stop fraud against the government.