The Cooper Health System and Cooper University Hospital in Camden, N.J., agreed to pay $12.6 million to dispose of allegations that it improperly paid for referrals to the Cooper Heart Institute through compensated memberships on the Cooper Heart Institute Advisory Board (CHIAB) in a settlement with the U.S. Attorney and New Jersey Attorney General. U.S. District Judge Joseph E. Irenas unsealed the case, accepted the settlement agreement and signed an order dismissing the civil claim on Jan. 24.
The settlement resolves a civil suit originally brought by a cardiologist, Nicholas L. DePace, MD, alleging that Cooper used compensated CHIAB memberships to induce referrals, which violated the federal and state false claims acts, anti-kickback laws and self-referral statutes. The U.S. Attorney pursued the prosecution as a qui tam action, also called a whistleblower suit; DePace is entitled to a payment of almost $2.4 million of the total settlement amount, plus $430,000 for expenses, attorneys’ fees and costs directly from Cooper.
“DePace believes the agreement is fair, adequate and reasonable, and he is pleased with the outcome of the case,” DePace’s attorney, Michael A. Morse, of Pietragallo Gordon Alfano Bosick & Raspanti, told Cardiovascular Business.
In the settlement agreement, the parties acknowledged that from 2004 until 2010 Cooper recruited physicians to become members of the CHIAB, and paid them $18,000 per year for doing so. In return, CHIAB members were obligated to attend four meetings per year. DePace, a cardiologist in the Philadelphia area, was invited to join the CHIAB in 2007.
“DePace, as he sat in the first meeting, observed a group of referring physicians who were sitting and listening to lectures that were essentially promotional lectures for cardiac care at Cooper, and presentations on very general topics such as presidential candidates’ healthcare policies,” Morse explained. “There were no advisory services being given in exchange for the payments they were receiving.” DePace attended a portion of a second meeting before filing his suit under seal in 2008.
The settlement agreement contained a statement that Cooper admitted no liability and that neither the U.S. Attorney, the N.J. Attorney General nor DePace conceded that “their claims are not well-founded.” Rather, the purpose of the settlement agreement was “[t]o avoid the delay, uncertainty, inconvenience and expense of protracted litigation of the … claims.”
In a letter to employees dated Jan. 24, Cooper’s President and CEO John P. Sheridan Jr. stated that “after three years of extended discussions with government lawyers [it was] …in the best interests of Cooper, to settle our dispute without the admission of wrongdoing to avoid the burdens and uncertainties of a protracted litigation. This allows us to focus our full energies on serving our community.”
The letter went on to say that the settlement “underscores the difficult regulatory environment in which health providers must operate. The rules are complex, the margin for error is small and the financial consequences of even well-intentioned actions can be substantial—regardless of the integrity and necessity of the underlying medical care.”
The letter asserted that Cooper has established a “dynamic and responsive” compliance program and that it has “shared these initiatives with the government and they have been favorably received.”
The settlement agreement did not contain a reference to a corporate integrity agreement or mandatory compliance plan.
Neither Cooper representatives nor the offices of the prosecuting attorneys responded to requests for comment.