The DOJ just announced that Silver Lake Hospital and its investors will pay over $30,000,000 to resolve allegations of violating the False Claims Act (FCA) and the Federal Debt Collection Procedures Act (FDCPA). Silver Lake is a New Jersey based long-term care hospital that allegedly claimed excessive cost outlier payments from Medicare.

Medicare provides cost outlier payments to supplement reimbursements when a patient’s cost of care is unusually high. The supplemental outlier payment system was enacted by Congress to incentivize hospitals to treat inpatients with atypical care costs. The government alleged that Silver Lake distorted the cost outlier payment system by increasing its charges in excess of any increase in its costs. By increasing its charges, Silver Lake allegedly skewed the cost outlier formula that multiplies the hospital’s current charges by its cost-to-charge ratios to adjust the hospital’s charges to the hospital’s costs.  Silver Lake will pay over $18.6 million, plus interest, over a period of five years. 

The government further alleged that Silver Lake transferred millions to its investors without receiving equivalent value in return, when the hospital knew or should have known that it would not be able to repay its debts to Medicare. As such, Silver Lake’s investors will pay $12 million, plus interest, to resolve allegations of violating the FDCPA.

Upon announcement of the foregoing settlement, U.S. Attorney Philip R. Sellinger for the District of New Jersey commented that “Medicare is not there for hospitals and their investors to gain unwarranted financial windfalls. As alleged, this hospital falsely reported its costs to Medicare for years and reaped millions in unjustified payments. Along with our partners, this office is committed to protecting the Medicare system from all forms of fraud schemes.”

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and litigation. If you need assistance with such a matter, please contact us today.