Qui Tam Suit Against Cooper Health System Finally Resolved
A False Claims Act lawsuit filed against Cooper Health System, a New Jersey hospital, by Delaware Valley cardiologist Nicholas L. DePace, M.D., set off what became a multi-year investigation by the United States Department of Justice and the New Jersey Attorney General’s Office.
The qui tam suit was filed in federal district court in New Jersey in 2008 by Dr. DePace and alleged that Cooper Health System and Cooper University Hospital paid millions of dollars in illegal kickbacks to physicians to induce them to refer patients to Cooper for expensive in-patient and out-patient cardiac services. In the recent settlement, Cooper Health System agreed to pay $12.6 million in order to resolve these claims that it paid kickbacks to doctors in order to build its own cardiology program, U.S. Attorney Paul Fishman said.
The settlement is one of the largest against a hospital for operating an illegal kickback scheme and one of the largest recoveries for the State of New Jersey under its state False Claims Act, which provides financial incentives to whistleblowers who notify the government of fraud.
Details of the Qui Tam Case
In the spring of 2007, Cooper invited Dr. DePace to join the Cooper Heart Institute Advisory Board (CHIAB). After attending the first CHIAB lecture, Dr. DePace realized that CHIAB was nothing more than a poorly disguised kickback scheme. The physicians in attendance were each paid $18,500 for doing nothing more than showing up and listening to marketing lectures on various topics that had no relation to cardiology. In fact, Cooper paid the outside physicians $18,500 each year simply to serve on the CHIAB and attend four meetings a year, according to Fishman. DePace then discovered that the other CHIAB members were family physicians with high-volume practices, each of whom had the ability to direct millions of dollars in patient care straight to Cooper.
In exchange for the kickbacks, CHIAB physicians referred their patients to the Cooper Heart Institute for expensive in and outpatient cardiac services. Allegedly, one CHIAB member admitted to DePace that, when making referrals, he knew that Cooper, through the CHIAB, “butters his bread.”
“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.”
Cooper’s kickback scheme allegedly violated the federal and state Anti-Kickback Statutes, Physician Self-Referral laws, and the federal and New Jersey False Claims Act. Dr. DePace was compelled to action by the CHIAB scheme, as patients were being fraudulently referred to Cooper instead of basing that referral on the best medical interests of the patients. Dr. DePace filed his qui tam lawsuit in 2008 in an effort to stop this kickback scheme. 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 Agrees to Settle
In the settlement details, Cooper agreed to pay $10.3 million to the U.S. government and $2.3 million to New Jersey. The Unites States government will pay DePace, the whistleblower in the case, $1.95 million and New Jersey will pay him $442,890, according to an official settlement agreement filed in federal court in Camden. Dr. DePace is entitled to receive a share of the governments’ recovery for coming forward and reporting Cooper’s fraudulent kickback scheme. In addition, the False Claims Act requires that Cooper pay DePace’s attorneys’ fees and the costs expended in the investigation and prosecution of the case.
After negotiating for over three years with the government, Cooper stated that they chose “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.