A federal lawsuit filed by prominent Delaware Valley cardiologist Nicholas L. DePace, M.D., sparked a multi-year investigation by the United States Department of Justice and the New Jersey Attorney General’s Office that has resulted in New-Jersey based Cooper Health System, and Cooper University Hospital paying $12,600,000 to settle Medicare and Medicaid fraud allegations.
According to Dr. DePace’s Complaint, since 2004, Cooper funneled illegal kickbacks to referring physicians through an advisory board known as the Cooper Heart Institute Advisory Board (“CHIAB”). Cooper established the CHIAB in 2004, with the stated purpose of utilizing prominent New Jersey physicians to advise the Cooper Heart Institute regarding innovative technologies, new management strategies, community needs, and appropriate educational and research initiatives.
In reality, the CHIAB was a sham, in which Cooper paid physicians with high-volume medical practices upwards of $18,500 each to do little more than watch four lectures per year hosted at an elegant banquet facility. These lectures consisted mostly of marketing presentation on cardiac care at Cooper. Additional lectures included generic subjects that were irrelevant to the stated mission of the CHIAB, including a 2008 lecture entitled: “The Healthcare Plans of the Two Presidential Candidates.”
In the spring of 2007, Cooper invited Dr. DePace to join the CHIAB. After attending his first CHIAB lecture, Dr. DePace quickly realized that the CHIAB was a thinly-veiled kickback scheme. Dr. DePace observed that the other CHIAB members were family physicians with high-volume practices. These physicians were all in the position to direct millions of dollars in patient care to Cooper.
Dr. DePace also observed that the CHIAB physicians were paid $18,500 for doing nothing more than sitting and listening to marketing presentations and lectures on irrelevant topics. The physicians did not discuss the lecture topics, and were not required to perform any additional work in exchange for the payments from Cooper.
In exchange for Cooper’s kickback payments, CHIAB physicians referred their patients to the Cooper Heart Institute for expensive in-patient and out-patient cardiac services. At least one CHIAB member admitted to Dr. DePace that, when making referrals, he knew that Cooper, through the CHIAB, “butters his bread.”
The settlement with the United States, and the State of New Jersey, announced today, will require Cooper to pay the United States $10,000,000 and the State of New Jersey $2,600,000. The settlement is one of the largest against a hospital for operating a kickback scheme, and is one of the largest recoveries for the State of New Jersey under its recently passed state False Claims Act. Cooper denies that it is liable for violating federal or state laws.