New Jersey Hospital and Investors to Pay United States $30.6 Million for Alleged False Claims

Silver Lake Hospital and Investors Agree to Multimillion-Dollar Settlement Over Alleged Exploitation of Medicare Payments

In a landmark settlement, Newark's Silver Lake Hospital, along with its investors, will pay $30.6 million to the U.S. government for alleged violations of the False Claims Act and Federal Debt Collection Procedures Act, as announced by U.S. Attorney Philip R. Sellinger.

The case against Columbus LTACH, doing business as Silver Lake Hospital, revolves around accusations of fraudulently claiming excessive "cost outlier" payments from Medicare, a program designed to support patient care needs. Silver Lake has agreed to a payment exceeding $18.6 million, while certain investors will contribute an additional $12 million, both including interest. This settlement, to be completed over five years, reflects the hospital's stated inability to pay a larger sum immediately.

U.S. Attorney Sellinger emphasized Medicare's role in supporting essential patient care rather than serving as a financial boon for healthcare providers. He condemned the alleged falsification of costs by Silver Lake, resulting in millions of dollars in unjust payments.

Reinforcing this standpoint, Principal Deputy Assistant Attorney General Brian M. Boynton clarified that cost-outlier payments are meant to aid hospitals in delivering care, not as a means for unwarranted enrichment. Similarly, FBI-Newark's Special Agent in Charge, James E. Dennehy, highlighted Silver Lake's misuse of the Medicare outlier payment program, which is intended for reimbursing extraordinary patient care costs.

According to Special Agent in Charge Naomi Gruchacz of HHS-OIG, fraudulent reimbursement claims not only divert funds but also increase the cost of taxpayer-funded healthcare. The HHS-OIG remains committed to holding providers accountable for such exploitation of federal programs.

The allegations involve Silver Lake significantly inflating charges, disproportionately to any actual cost increase, and transferring substantial funds to investors without equivalent returns. This behavior, the government alleged, violated the False Claims Act and the FDCPA.

The settlement implicates principal investor Dr. Richard Lipsky and Columbus Management South LLC, an entity linked to other investors of Silver Lake, in the resolution of the FDCPA allegations.

This resolution results from collaborative efforts by the District of New Jersey's U.S. Attorney’s Office, the Civil Division of the U.S. Department of Justice, the Department of Health and Human Services, and the FBI.

While the settlement addresses these allegations, it is important to note that there has been no formal determination of liability. The U.S. government continues to prioritize combating healthcare fraud, relying heavily on the False Claims Act and encouraging public reports of potential fraud through HHS.