2002-09-26 -- Memorial Hospital -- Settlement -- News Release

Memorial Hospital of Salem County Reaches $1 Million Settlement on Mishandling of Controlled Substances

NEWARK - Memorial Hospital of Salem County reached a settlement today that requires the not-for-profit hospital to pay a civil penalty of $1 million for violations in the management of its inventory of controlled substances, U.S. Attorney Christopher J. Christie announced.

The Drug Enforcement Administration commenced an investigation in May 2002 after hospital consultants notified the DEA that they had uncovered irregularities in the hospital's accounting for controlled substances. Many violations of DEA regulations were found by DEA, including failures to report thefts or losses of controlled substances such as Demerol and Percocet; failures regarding security controls for controlled substances; failures to properly account for disposal of controlled substances; failures to properly inventory controlled substances; failures to keep records of controlled substance orders; and, failures to keep records regarding receipt and dispensing of controlled substances in the hospital.

The hospital has paid the $1 million penalty.

In negotiating the settlement, the U.S. Attorney's Office recognized several important factors that will have a positive affect on patient-care and the surrounding community. Memorial Hospital has demonstrated to the DEA that it has instituted substantial improvements to ensure compliance with all regulations. Additionally, the Hospital has disclosed to the U.S. Attorney's Office that it will, as early as today, close a deal whereby its assets will be sold to Salem Hospital Corporation, a New Jersey business corporation wholly owned by CHS/Community Health Systems, Inc., a Delaware corporation. The proceeds of this sale will be distributed solely to projects benefitting the Hospital's local community.

"While the seriousness of the hospital's infractions can not be overlooked, the resolution is good for all concerned, including the community," Christie said.

Christie credited Special Agents with the DEA at its Camden Resident Office, under the direction of Special Agent in Charge Anthony Cammarato, with investigating the case.

The case was handled by Michael A. Chagares, chief of the U.S. Attorney's Office Civil Division in Newark.

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Defense Attorney: John B. Reiss, Esq. Philadelphia