By: Richard L. Smith
Columbus LTACH, operating as Silver Lake Hospital, a long-term care hospital in Newark, New Jersey, along with certain investors, have agreed to a $30.6 million settlement to resolve accusations of healthcare fraud.
U.S. Attorney Philip R. Sellinger announced the settlement, which addresses alleged violations of both the False Claims Act and the Federal Debt Collection Procedures Act (FDCPA).
Silver Lake Hospital has agreed to pay over $18.6 million, plus interest, for allegedly claiming excessive cost outlier payments from the Medicare program.
This practice is said to have led to the hospital receiving millions in unjustified payments. Additionally, certain investors of Silver Lake have agreed to pay $12 million, plus interest, to settle claims of fraudulent money transfers from the hospital to its investors.
These payments will be made over a five-year period, with the terms considering Silver Lake's limited capacity to pay the full amount immediately.
U.S. Attorney Sellinger emphasized that Medicare is intended to ensure necessary patient care, not to provide unwarranted financial gains to hospitals and their investors.
He highlighted the commitment of his office to protect the Medicare system from fraud.
Brian M. Boynton, Principal Deputy Assistant Attorney General, underscored that cost outlier payments should support hospitals in providing care, not serve as a source of enrichment unrelated to actual care costs.
Meanwhile, FBI-Newark Special Agent in Charge James E. Dennehy remarked on the misuse of the Medicare outlier payment program by Silver Lake to obtain reimbursements they weren't entitled to.
Naomi Gruchacz, Special Agent in Charge for the Department of Health and Human Services Office of Inspector General (HHS-OIG), also commented on the broader impact of such fraudulent activities, noting how they can affect the availability of funds and services and increase the cost of taxpayer-funded healthcare.
The HHS-OIG is committed to working with law enforcement partners to hold healthcare providers accountable for exploiting federal healthcare programs.
The Medicare program provides supplemental reimbursement, known as "cost outlier" payments, for unusually high care costs.
However, it was alleged that Silver Lake manipulated this system by rapidly inflating charges beyond any increase in costs, which the hospital later couldn't repay when reconciled with Medicare cost reports.
Furthermore, the settlement addresses allegations that Silver Lake unlawfully transferred hospital funds to its investors, led by principal investor Dr. Richard Lipsky and Columbus Management South LLC, without equivalent value in return, especially when the hospital was unable to repay its debts to the Medicare program.
This conduct was deemed to violate the FDCPA.
This substantial settlement resolves serious allegations against Silver Lake Hospital and its investors.