UMDNJ whistleblower cases cost Rutgers nearly $2M in settlements

Ted Sherman | NJ Advance Media for NJ.com
By Ted Sherman | NJ Advance Media for NJ.com
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on April 26, 2015 at 9:05 AM, updated April 26, 2015 at 9:08 AM
NEW BRUNSWICK — Rutgers University has quietly resolved several major whistleblower cases inherited with the merger of the University of Medicine and Dentistry of New Jersey, agreeing to nearly $2 million in settlements with former high-level administrators.

The never-disclosed confidential agreements bring to an end two long-running lawsuits that charged UMDNJ, the state’s troubled former medical university, with wrongful termination over alleged fraud and illegal bidding practices.

In one case, Rutgers earlier this month reached a $1.2 million settlement with Edward Burke, the former chief financial officer of UMDNJ’s University Hospital in Newark, who said he was fired after he accused top administrators of systematically defrauding Medicaid.

And last year, Rutgers reached a $700,000 settlement with Ellen Casey, a purchasing official for UMDNJ, who claimed she was terminated after discovering that telecommunications contracts worth millions of dollars were being awarded without public bids.

Rutgers imposed strict restrictions on the disclosure of any terms of the settlements on lawyers in the two cases. NJ Advance Media, however, obtained copies of both through Open Public Records Act requests with the state university.

In a statement, Rutgers spokesman Greg Trevor said the university “is satisfied with the resolution of these cases that were filed before the integration of most of UMDNJ with Rutgers.”

Attorneys for the former employees who brought the litigation did not comment.

But Adam Henick, a one-time vice president at UMDNJ’s University Hospital who oversaw Medicaid billing for outpatient services and first discovered evidence of overbilling in 2002 before being forced out, said Rutgers “is probably trying to put UMDNJ’s sordid past to rest.”

A medical university marred by scandal

That past had included a culture of waste, fraud and abuse, including lucrative consulting contracts that went to political insiders, double-billing Medicare and Medicaid by millions of dollars, and an illegal kickback scheme that gave doctors no-show jobs in return for referring patients to the university’s faltering cardiac surgery program.

One state powerbroker, former state Sen. Wayne Bryant was eventually sentenced to four years in federal prison for using his influence in Trenton to secure a pension-padding job at UMDNJ that required little work.

UMDNJ ultimately came under the oversight of a federal monitor in 2005, following threats by then-U.S. Attorney Chris Christie to prosecute UMDNJ for allegedly overbilling the government $4.9 million for treatment of Medicare and Medicaid patients. The fraud and waste at the medical university, though, spawned more than a dozen whistleblower and wrongful termination lawsuits against UMDNJ, many settled out of court.

In 2009 UMDNJ reached a $2 million settlement with the U.S. Justice Department over the Medicare and Medicaid fraud allegations. Unsealed court records later revealed that it had been a former UMDNJ faculty member and attending physician, Steven Simring, who first alerted federal prosecutors to the illegal billing, after he filed a whistleblower complaint under the Federal False Claims Act. He received a portion of the settlement with the justice department.

After absorbing most of UMDNJ, though, Rutgers still found itself defending—and fighting—several outstanding legal cases being contested in state and federal courts.

Alleged billing fraud

In the most recent settlement, Burke, the University Hospital CFO, had accused superiors of retaliating after he accused the school of covering up its failure to comply with federal rules. According to a complaint filed in federal court in 2008, Burke alleged UMDNJ had been deliberately overpaying doctors and shifting those costs to the hospital to inflate its Medicare, Medicaid and Charity Care reimbursements.

He also claimed the UMDNJ teaching hospital had been subsidizing the private practices of faculty physicians. Burke said he was forced out because he raised the issue of physician overcompensation and potential criminal violations.

The university, in its most recent court filings, responded that Burke’s claims had been raised by others and had been addressed—calling his case an “opportunistic and parasitic suit” based on information already publicly disclosed.

“Burke attempts to walk a paved road years in the making by many others before him,” wrote university attorneys. “For the past decade, numerous litigations and extensive media coverage have discussed alleged Medicare, Medicaid and Charity Care fraudulent billing and reimbursement issues involving the University of Medicine and Dentistry.”

Earlier this month, however, Rutgers agreed to settle the matter and Burke agreed to drop his lawsuit with the payment of $1.2 million by Rutgers, paid in part by the medical school’s faculty practice group.

The settlement covered all claims by the former UMDNJ vice president, as well as any back pay, lost benefits and attorneys’ fees. Rutgers admitted no wrongdoing.

Burke’s attorney, Neil Mullin of Mullin Smith in Montclair, did not return calls or emails.

In a similar settlement, Rutgers last year also agreed to pay Casey, who had complained that telecommunications contracts worth millions of dollars were being awarded without public bids. Casey, in a lawsuit filed in the state courts in 2008, charged that UMDNJ continued to violate New Jersey bidding statutes even as a federal monitor was winding down his oversight and new controls were imposed. At one point, she said her department was forced to hire a politically connected employee for a mailroom position that did not exist.

Her attorney, James O’Donohue of Hill Wallack in Princeton, would say nothing of the settlement, only that the case “was resolved to the satisfaction of all parties.”

Meanwhile, Rutgers officials earlier this month said they were recently notified that the federal Office of the Inspector General of the U.S. Department of Health and Human Services was finally concluding its own monitoring of the medical and health science schools now under Rutgers—nearly a decade after the scandal at UMDNJ first came to light.

Ted Sherman may be reached at tsherman@njadvancemedia.com. Follow him on Twitter @TedShermanSL. Find NJ.com on Facebook.

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