NEWARK — Camden-based Cooper Health System will pay $12.6 million to settle kickback allegations, according to state and federal authorities.

An investigation by the state Attorney General and the U.S. Attorney’s Office had alleged the hospital violated the False Claims Act by making improper payments to physicians under so-called “consulting” and “compensation” agreements while it was building its cardiology program.

The settlement was announced late Thursday.

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“Payments to outside physicians by hospitals require heightened scrutiny because those payments may be improper if they are based on patient referrals,” U.S. Attorney Paul Fishman said. “Such kickback arrangements interfere with the physician-patient relationship and can lead to problems of overutilization and increased costs. Federal health care participants, such as Cooper, who run afoul of the prohibitions against kickbacks must be held responsible.”

Authorities alleged Cooper recruited and paid physicians to serve on its heart institute advisory board from 2004 through 2010. Prosecutors claimed the payments were made to get doctors to refer patients to Cooper.

Cooper President and CEO John Sheridan Jr. released a statement saying the hospital decided to settle the dispute without admitting any wrongdoing to avoid potential costs of a drawn-out lawsuit.

State and federal authorities claimed that from October 2004 through the end of 2010, Cooper paid local outside physicians approximately $18,000 per year to attend four meetings over the course of a given year. The purpose of the payments, it was alleged, was to induce the physicians to refer patients to Cooper. Subsequent billing of Medicare and Medicaid for those referrals gave rise to the false claims charges.

Under terms of the settlement, Cooper will pay $10.2 million to the federal government and $2.3 million to New Jersey.


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