"A Public Embarrassment": UMDNJ Offered Deferred Prosecution

The story of the University of Medicine and Dentistry of New Jersey (UMDNJ) just gets ever more dismal. We had previously discussed allegations that UMDNJ had offered no-bid contracts, at times requiring no work, to the politically connected; had paid for lobbyists and made political contributions, even though UMDNJ is a state institution; and seemed to be run by political bosses rather than health care professionals. (See most recent post here, with links to previous posts.)

In the last week, allegations that UMDNJ had overbilled Medicare and Medicaid emerged. The Newark Star-Ledger reported:

• In 1999, a memo to Catherine Marino, then Medical Director of University Hospital, suggested that the University's "computer system inexplicably was configured to charge the maximum possible daily reimbursement rate for all Medicare patients admitted to UMDNJ's University Hospital in Newark, regardless of the actual care provided - essentially overcharging the federal government millions of dollars." Marino instituted "procedures to correct the problem," and assumed it had been fixed.
• In 2001, a "confidential report by an outside consultant... again concluded the hospital and its physicians were billing Medicare for the same services in many clinics. Records show that report about double-billing went to Vivian Sanks King, an attorney who was the university's vice president for legal management."
• In 2002, a University official conducted a routine internal review of billings for acute hospital care. The review discovered both double-billing and "configuring the hospital's billing system to the highest level of care, or acute care," apparently regardless of the services rendered. The official said, "When we started to look at that, we realized it hadn't been changed [from 1999]. I absolutely believe it was intentional. They actually went in there and made everything appear it was covered (at the full rate), and it wasn't. You can't look at that as being accidental." The amount of overcharging appeared to "be in the millions of dollars."
• "Separately, ... [the officer] said an audit conducted by the accounting firm of PricewaterhouseCoopers also found significant coding errors that indicated significant overpayments by Medicare: Basically, the hospital was charging for services not provided, or charging at the wrong rate."
• The official brought the issues to Vivian Sanks King.  The official "said she was instructed to take back all memos and make it appear that the review was only in draft form." Sanks Kings did not respond to the Star-Ledger's reporters.  The official "said she was forced to resign in July, 2003."
• The issue came up again next summer. Adam Henick, UMDNJ vice president for ambulatory care, and James Lawler, University Hospital's Chief Financial Officer (CFO), "also sent a memo to Sanks King reporting the improper billing." "Hennick said that after he threatened to report the problem to federal regulators, he was taken off the task force. He then went to the Office of the Inspector General for the Centers for Medicare & Medicaid Services and to the state Department of Criminal Justice. A month later, his employment was terminated."

The next day, the Star-Ledger reported:

• James Lawler, before he resigned as hospital CFO, refused to sign off on the hospitals Annual Report on Medicare. His lawyer said Lawler "did not feel he could vouch for the hospital's report. The attorney said no one else in the finance department was willing to sign it either."

The day after, the Star-Ledger reported that two members of the UDMNJ Board of Trustees resigned because of conflicts of interest. Yesterday, a third resigned. They had not been accused of any wrongdoing, and were complying with a new order from the Interim State Governor that no one with a potential conflict could serve on the board. In fact, NJ state senator "Loretta Weinberg, the most vocal critic of UMDNJ's administration in the state Legislature, said she was sorry to see the three members resign because they were among 'the good guys.'"

Then came the coup de grace. Today the Star-Ledger reported that US Attorney Christopher Christie gave UMDNJ the choice of accepting a deferred prosecution agreement, which included the placement of a federal monitor to supervise all of the University's finances, or face indictment for federal fraud charges. Such an indictment "would result in the cutoff of all Medicaid and Medicare reimbursement to the UMDNJ's University Hospital in Newark, closing it down." While talking to the Board, Christie announced,

This place is a public embarrassment.

According to an accompanying article in the Star-Ledger, during Christie's meeting with the Board, "Only Christie spoke. He went on for about an hour, laying out the criminal case his office was prepared to pursue, one that could cripple the university. He cited statutes and potential crimes that date back to 1999. He reminded board members the agreements wouldn't spare individuals. Some remain 'subjects' of an investigation, he said." Another article noted that similar deferred prosecution agreements had been used against large corporations, including Bristol Myers Squibb this year. However, no one could recall a University submitting to one.

The problems at UMDNJ have received considerable attention in the local media, but still not in the national media, nor in medical and health care publications. Although the actions of UMDNJ leadership have been assailed by local editorialists, state politicians, and one US Attorney, so far, we have yet to hear any criticism from any national physician, hospital, academic, or accrediting organization, or the like. Thus, the anechoic effect persists.

Yet, when the now obviously egregious case of bad leadership at UMDNJ is added to the numerous other cases that have appeared on Health Care Renewal, we see problems not just local to the state of New Jersey, but national, and probably global.

Clearly, health care leaders who are more concerned about their personal business and political interests than the mission of their health care institutiosn are unlikely to be effective in pursuing that mission. Letting such leaders persist in power risks wrecking whole health care institutions, as seen in the case of UMDNJ.
Once again, until we ensure that health care organizations' governance is representative, accountable, transparent, and ethical, we will continue to get inaccessible, over-priced, shoddy health care.

We need the sort of dogged law enforcement that has been directed against UMDNJ's publicly embarrassing leadership. But a revolution in health care leadership will only be achieved by grass-roots action, by physicians and other health care professionals, and ultimately by the public. Bad leaders will not reform themselves.