Medicare Fraud

Washington, DC: (Feb-4-08) The United States Government brought charges against IJKG, LLC, the buyer of Bayonne Medical Center, alleging that the Bayonne, NJ Medical Center defrauded the Medicare program. The suit stated that the hospital improperly increased charges to Medicare patients in order to obtain enhanced reimbursement from Medicare. In addition to its standard payment system, Medicare provides supplemental reimbursement, called outlier payments, to hospitals and other health care providers in cases where the cost of care is unusually high. The Justice Department said that the Congress enacted the supplemental outlier payment system to ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs. The suit claimed that between January 2000 and August 2003, Bayonne purposefully inflated charges for inpatient and outpatient care to make these cases appear more costly than they actually were, and thereby obtained outlier payments from Medicare that it was not entitled to receive.

Records show that Bayonne Medical Center filed for bankruptcy under Chapter 11 of the Bankruptcy Code in 2007. As part of the proposed reorganization, IJKG, LLC agreed to purchase the hospital's assets and to settle the United States' claims against the hospital. As part of the settlement reached, IJKG, LLC, agreed to pay the government $2.5 million, plus interest to resolve allegations. [DEPARTMENT OF JUSTICE: MEDICARE FRAUD]

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Published on Feb-5-08