Double-billing Settlement Highlights Whistleblower Concerns

Earlier this week, the University of Medicine and Dentistry of New Jersey agreed to pay the federal government $2 million to settle a whistleblower lawsuit alleging that it bilked Medicaid in a double-billing scheme that started in 1993 and ended in 2003, according to the Department of Justice.

The settlement was the second time UMDNJ paid the government for the double-billing scheme. The first was in 2005 when the hospital paid $4.9 million to the state of New Jersey to settle criminal charges.

In the end, UMDNJ ended up paying nearly $7 million total for the scheme, but, according to Marcella Auerbach, managing partner at Nolan & Auerbach, the hospital could have avoided the lengthy and costly litigation and saved millions, if it had acted differently.

According to Auerbach, a former federal prosecutor who now exclusively represents whistleblowers in healthcare fraud cases, UMDNJ’s in-house attorney discovered the hospital and its physicians were billing for the same services back in 2001-before any whistle was blown. The lawyer brought the issue to the hospital’s attention, but the management looked the other way, and continued to double-bill for the three years following the warning, he says.

The fact that UMDNJ knew about the double-billing, knew it was illegal, and continued to do it, is what makes the case so interesting. According to Auerbach, the hospital could have saved millions if it ceased double-billing and came clean to the government through a self-disclosure.

“It’s a bet,” Auerbach says. “They are betting on the fact they won’t get caught.”

However, UMDNJ hit one too many times and ended up going bust. The man who busted the hospital is Steven Simring, MD, who will collect $801,000 for his efforts.

Based on the details of the case, Auerbach was not surprised to see a doctor blow the whistle on the hospital. Evidence shows that there were many discussions about the double-billing in which doctors expressed concern. Auerbach says it comes as no surprise that Simring would come forward and blow the whistle rather than risk being prosecuted himself.

Auerbach, who has extensive experience in whistleblower cases, says the gambler’s mind-set is common in whistleblower cases. Rather than play by the rules and fess up, many facilities try to sweep problems under the rug and pretend they never happened. Some even go one step further. Auerbach says many times concerned employees will raise a compliance concern only to be handed a pink slip for their trouble, which raises another legal problem.

“These people are fired for bringing points up,” Auerbach says, “Then they come to us and they have two claims.”

Auerbach says this case can be seen as a message to healthcare leaders. The DOJ is saying take any compliance concerns presented by employees or legal council very seriously and, when appropriate, self-disclose. The alternative is a lengthy, expensive, public whistleblower case.

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For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA.