The parent company of two New Jersey hospitals will pay the federal government $7.95 million to resolve allegations that the facilities defrauded the Medicare program.

The U.S. Justice Department announced Dec. 16 that a settlement was reached with Our Lady of Lourdes Health Care Services Inc., of Camden, N.J., which operates Our Lady of Lourdes Medical Center (OLL) in Camden, and Lourdes Medical Center of Burlington County (LMC) in Willingboro, N.J.

The health system did not respond to a request by IFAwebnews.com for comment on the settlement.

The suit was brought by a whistleblower, Tony Kite, a private health care consultant, in 2005. Through the whistleblower provisions of the False Claims Act, which permits private citizens to report fraud against the government, Kite will receive $356,000, plus interest, in the settlement, the department reported.

The lawsuit alleged that LMC fraudulently inflated charges to Medicare patients to obtain enhanced reimbursement from the program. In addition to its standard payment system, Medicare also provides supplemental reimbursement, or “outlier payments,” to hospitals and other health care providers in cases where the cost of care is unusually high. The payments are a type of incentive for hospitals to treat patients whose care requires unusually high costs.

LMC was accused of inflating its charges to obtain those outlier payments for cases that were not extraordinarily costly and for which outlier payments should not have been paid.

A separate investigation of OLL found that the hospital also wrongfully obtained excessive outlier payments.

The settlement was the result of work conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of New Jersey, the Department of Health and Human Services Office of Inspector General and the Centers for Medicare and Medicaid Services and the Federal Bureau of Investigation.