Cooper Health System Pays $12.6 Million To Resolve False Claims Lawsuit Over Kickbacks Paid To Referring Physicians

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.

The qui tam lawsuit filed in federal district court in New Jersey in 2008 by Dr. DePace alleged that the Cooper Health System and Cooper University Hospital (collectively referred to as "Cooper") paid millions of dollars in illegal kickbacks to physicians to induce them to refer patients to Cooper for expensive in-patient and out-patient cardiac services.  A copy of Dr. DePace's qui tam Complaint, which both the United States and the State of New Jersey joined, along with a copy of the Settlement Agreement can be found at www.falseclaimsact.com; and www.usdoj.gov/usao/nj/.  The United States and State of New Jersey did not file their own Complaint. 

Details of Cooper's Alleged Kickback Scheme

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."

Relator Dr. Nicholas L. DePace

Dr. Nicholas L. DePace is a nationally-recognized expert in cardiology, a prolific author, and noted philanthropist.  He runs a busy solo-cardiology practice with offices in Philadelphia and Sewell, New Jersey.                      

Dr. DePace has practiced medicine in New Jersey and Pennsylvania for more than 30 years.  He is Board Certified in both Cardiology and Internal Medicine.  He is also certified in Echocardiology, Nuclear Cardiology, and Lipidology.  Dr. DePace has, since age 33, served on the faculty of numerous medical schools, including the Medical College of Pennsylvania, Thomas Jefferson University, and Drexel University College of Medicine (formerly Hahnemann University).  He is a Fellow of the American College of Cardiology and the American College of Chest Physicians.

Dr. DePace Exposes Cooper's Kickback Scheme

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."

Dr. DePace was alarmed by the CHIAB scheme because patients were being referred to Cooper because of the kickbacks paid to physicians, instead of basing that referral on the best medical interests of the patients.  Dr. DePace filed his qui tam lawsuit in 2008 in an effort to stop this kickback scheme.

Cooper's Scheme Violated Federal and State Anti-Kickback Statutes and Physician Self-Referral Laws
Cooper's scheme is alleged to have violated federal and state Anti-Kickback Statutes, Physician Self-Referral laws, and the federal and New Jersey False Claims Act.

The federal Anti-Kickback Statute, along with similar state laws, generally prohibits the offering or paying anything of value to induce the referral of a service or item paid for by the Medicare or Medicaid programs.  42 U.S.C. Sec.1320a-7b(b)(1) and (2), and N.J.S.A. 30:4D-17(c).

The Federal False Claims Act

The False Claims Act allows private persons (known as "relators") to file a lawsuit against those business and individuals that have directly or indirectly defrauded the federal government.  The False Claims Act was enacted by Congress at the request of President Lincoln, who signed it into law on March 2, 1863.  The Act was strengthened in 1986, and again with amendments enacted in 2009 and 2010.  The Act is the government's primary tool against fraud by its contractors, as evidenced by the recovery of more than $33 billion since 1986.

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