Silver Lake Hospital, a long-term care hospital based in Newark, N.J., and some of its investors have agreed to pay $30.6 million to settle allegations that it violated the False Claims Act and Federal Debt Collection Procedures Act.
Five things to know:
1. The hospital will pay more than $18.6 million to resolve alleged FCA violations for claiming excessive cost outlier payments from the Medicare program while certain Silver Lake investors will pay over $12 million to resolve alleged FDCPA violations for the fraudulent transfer of money by the hospital to its investors.
2. The settlement resolves claims that Silver Lake improperly distorted the cost-outlier payment system by rapidly increasing its charges well in excess of any increase in its costs and far beyond what it had the financial ability to repay once its Medicare cost reports were reconciled to account for these charge increases, according to the Justice Department.
3. The settlement also resolves allegations that Silver Lake transferred millions of dollars of the hospital's money to its investors without receiving equivalent value in return, according to prosecutors. The allegation came at a time when the hospital had reason to believe that it would not be able to repay its debts to the Medicare program.
4. Payments made to settle the FDCPA allegations will be made by Richard Lipsky, MD, the hospital's main investor, and Columbus Management South, an entity through which other Silver Lake investors received cash distributions from the hospital, according to the Justice Department.
5. The settlement will be paid over five years. The Silver Lake payment was negotiated based on the hospital's lack of ability to pay, prosecutors said.