JANUARY 18, 2024. New Jersey based Columbus LTACH, a long-term care hospital which does business as Silver Lake Hospital (Silver Lake), will pay $18.6 million plus interest to resolve False Claims Act violations. Silver Lake’s investors will pay an additional $12 million to resolve allegations they violated the Federal Debt Collection Procedures Act (FDCPA), with a total settlement of $30.6 million for the case brought against them. The settlement will be paid over a period of five years, accounting for the hospital’s inability to pay the full amount up front.
The lawsuit centers around a Medicare program that provides supplemental reimbursement to health care facilities in cases where the cost of care is higher than normal. These “cost outlier” payments were enacted by Congress to ensure that hospitals are able to treat patients whose care may be unusually expensive. The cost outlier payments are created by a formula, guided by regulations and previous cost reports, to attempt to fairly adjust a health care facility’s charges to its costs. The previous cost reports may not always reflect the hospital’s current cost-to-charge ratios, which may lead to Medicare providing more money to the hospital than is needed. The cost outlier program has safeguards to mitigate this with a retrospective reconciliation process, where the hospital may have to pay back excessive outlier payments after costs are calculated.
Silver Lake allegedly improperly manipulated the cost outlier payment system, increasing its charges well beyond their actual increases in costs, far overreaching what the hospital had the ability to repay to Medicare after the retrospective reconciliation process. Silver Lake also allegedly transferred millions of dollars of the hospital’s money to its investors but did not receive equivalent value in return. This occurred at a time where Silver Lake had reason to believe it would be unable to repay its cost outlier-related debts to Medicare. Thus, the United States claimed that they violated both the False Claims Act, and the FDCPA.
The U.S. Attorney for the District of New Jersey said, “Medicare serves to ensure that patients get necessary care, including when that care is very expensive … Medicare is not there for hospitals and their investors to gain unwarranted financial windfalls. As alleged, this hospital falsely reported its costs to Medicare for years and reaped millions in unjustified payments.”
The government relies on whistleblowers to identify healthcare fraud and protect taxpayer dollars. Those who report healthcare fraud under the False Claims Act have protection from retaliation and are entitled to a portion of the government’s recovery.
If you would like to report Medicare, Medicaid or other healthcare fraud, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Eva was the Senior Counsel for Health Care Fraud. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Eva Gunasekera at [email protected] or contact Renée at [email protected] (tel.: 202-417-3664). Visit Tycko & Zavareei LLP’s website for whistleblowers to learn more at www.fraudfighters.net.