The North Shore Long Island Jewish Health System Inc. has agreed to pay $3 million to settle a civil fraud lawsuit in a deal the U.S. attorney’s office announced Tuesday.
The suit, filed in federal court in Manhattan, alleged that the defendants knowingly submitted false claims for Medicare reimbursement for ineligible overhead expenses from 1994 through 2001.
The investigation, which began in 2006, was disclosed in a 2009 official statement when the North Shore-Long Island Jewish Obligated Group sold $296.5 million of bonds through the Dormitory Authority of the State of New York.
“Medicare fraud jeopardizes our health care system, deprives eligible patients of the care they deserve, and cheats taxpayers of their hard-earned money,” U.S. attorney Preet Bharara said in a press release. “With the assistance of whistle blowers and our partners at [the U.S. Department of Health and Human Services], this office will continue to fight the illegal appropriation of Medicare funds.”
North Shore, the largest integrated health care system in New York. admitted no wrongdoing.
“The settlement resolves all government claims that North Shore University Hospital and LIJ Medical Center erroneously categorized certain overhead expenses in highly technical cost reports,” North Shore spokesman Terence Lynam said in a statement. Lynam said no errors were found in the “vast majority” of hospital records that investigators audited.
The obligated group, which includes North Shore-Long Island Health System and affiliated hospital and medical centers, had $1.12 billion of bonds outstanding at the end of 2009, according to an audited financial statement. North Shore posted an $83.3 million operating surplus on $4.8 billion of revenue. The obligor had $249.8 million of revenue available to pay $79.3 million of annual debt service in 2009, or 3.2 times debt-service coverage.
Moody’s Investors Service rates North Shore’s bonds Baa1 with stable outlook. In a June credit report, Moody’s cited the system’s leading market share on Long Island of approximately 32% as a strength and its weak but improving balance sheet as a drawback.