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Medicare Fraud

Newark, NJ: (Mar-05-08) The US Justice Department brought charges against Cathedral Healthcare System, the Newark-based hospital system affiliated with the Archdiocese of Newark, alleging that the hospital defrauded the federal Medicare program. The suit claimed that Cathedral inflated charges for Medicare patients to obtain additional federal reimbursement. Sources stated that the charges were filed after Peter Salvatori and Sara Iveson, who filed the first whistleblower lawsuit against Cathedral, accused the hospital of inflating charges for inpatient and outpatient care between January 1998 and August 2003, obtaining more money from Medicare than it was entitled.

Records show that a number of NJ hospitals have been targeted by the ongoing Medicare probe, first sparked by three federal lawsuits brought by whistleblowers under the federal False Claims Act. Justice department spokespersons said that the Saint Barnabas Health Care System, the state's largest medical network, agreed in 2006 to pay $265 million in a first-of-its-kind agreement to settle similar charges. Warren Hospital of Phillipsburg agreed in December to pay $7.5 million.

The Cathedral network is comprised of three Newark hospitals: Columbus Hospital, St. James Hospital and St. Michael's Medical Center. All three were sold in January to Catholic Health East of PA, and both Columbus and St. James are now slated to close. As part of a settlement reached, Cathedral Healthcare System agreed to a $5.3 million payout to resolve allegations. Cathedral spokespersons stated that the hospital also entered into a Corporate Integrity Agreement with the US Department of Health and Human Services. Under the settlement, Peter Salvatori and Sara Iveson, who filed the first whistleblower lawsuit against Cathedral, will receive 16%, or $848,000. [STAR LEDGER: CATHEDRAL TO PAY $5.3 MILLION TO SETTLE MEDICARE FRAUD SUIT]


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Published on Mar-6-08

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