March 4, 2008 — Cathedral Healthcare System

Cathedral Healthcare System Inc. (CHS) has agreed to pay $5.3 Million to settle qui tam claims, asserted by private relators Peter Salvatori and Sara Iveson, that CHS defrauded the federal Medicare program.

The allegations of the case were that the Newark NJ based hospital system improperly increased charges to Medicare patients in order to obtain enhanced reimbursement from the federal healthcare program.

More specifically, it was alleged that between January 1998 and August 2003 CHS improperly inflated charges for inpatient and outpatient care to make these cases more costly than they actually were, and thereby obtained payments from Medicare that it was not entitled to receive.

“Today’s settlement shows how the Department of Justice is committed to rooting out practices where hospitals knowingly overcharge the federal Medicare program” said Jeffrey Bucholtz, the acting Assistant Attorney General for the Civil Division.

The Relators who filed the qui tam action to expose CHS’s conduct, Mr. Salvatori and Ms. Iveson, will receive $848,000 as a reward.

See U.S. Dept of Justice Press Release 3/4/08

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