12-29-05 -- UMDNJ -- Criminal Complaint -- News Release

UMDNJ Accepts Federal Monitor of Operations; Health Care Fraud Prosecution Deferred

NEWARK – The University of Medicine and Dentistry of New Jersey today agreed to complete a series of financial, management and personnel reforms and to reimburse the state and federal governments for its purposeful over-billing of Medicaid. In return for the successful completion of those reforms, the institution will avoid criminal prosecution for health care fraud under terms of a Deferred Prosecution Agreement, U.S. Attorney Christopher J. Christie announced.

Christie also announced the selection of Herbert J. Stern, a former U.S. Attorney and federal judge in New Jersey, to be the federal monitor with wide discretion and powers to enforce and ensure compliance with the Deferred Prosecution Agreement (DPA).

“The time has long passed for UMDNJ to get its house in order on just about every level of its finances and management,” Christie said. “My desire and that of Governor Codey is to fix what’s wrong at UMDNJ, make it a better and stronger institution than it’s ever been and create a corporate environment in which none of the gross mismanagement or illegal conduct that we’ve seen in recent years will ever occur again.”

A criminal complaint charging UMDNJ with health care fraud was filed this morning in federal court. Under terms of the DPA, enforcement of the criminal charges in the complaint will essentially be held in abeyance for a period of 24 to 36 months. If UMDNJ complies with the terms of the DPA during that period, the criminal complaint will be dismissed.

Christie made clear that the DPA does not protect or absolve any individuals who may have been involved in criminal conduct. The criminal investigation is continuing and charges will be brought as necessary and appropriate.

The agreement sets out specific requirements for UMDNJ with the broader goal of making the institution open and accountable in every way for its finances and management. Those overarching goals are best described in Paragraph Five of the DPA:

“UMDNJ commits itself to achieving exemplary corporate citizenship, to best practices of effective corporate governance and the highest principles of integrity and professionalism, to the steadfast protection of public funds, and to fostering a culture of openness, accountability and compliance throughout the Institution. To advance and underscore this commitment, UMDNJ agrees to take the remedial measures set forth herein.”

Under terms of the agreement, which the UMDNJ board of trustees voted unanimously in favor of at its meeting this morning, the institution acknowledges its conduct in double-billing of the Medicaid program by its physicians and the University. UMDNJ agrees to reimburse to the federal and state governments a total of $4.9 million (of which $2.065 million has already been paid to the government). The $4.9 million represents the amount of willful double-billing known to date; any other amounts determined in the investigation to have been received unlawfully or in error by UMDNJ must also be reimbursed.

Among the other terms set forth in the agreement:

• UMDNJ will establish a position of Chief Compliance Officer (CCO) who will report directly to the UMDNJ president and board of trustees.

• The positions of CCO and a new general counsel will be filled through a nationwide search, after which the Monitor will recommend one or more candidates to the board for consideration and selection.

• UMDNJ will establish training and education programs as recommended by the Monitor that are designed to advance and underscore the institution’s commitment to exemplary corporate citizenship, corporate governance and the highest principles of integrity and professionalism. The Monitor and Board will determine who will be required to participate in such programs.

• UMDNJ will establish a hotline and email address for employees and others to notify UMDNJ of any concerns about unlawful conduct or other wrongdoing at UMDNJ.

The agreement requires UMDNJ to give the Monitor unfettered access to all documents and information which he deems necessary to fulfill his duties. The monitor will have no role in academic affairs.

UMDNJ must promptly notify the Monitor and the U.S. Attorney’s Office in writing of any allegations of unlawful conduct or other wrongdoing by the University, its trustees, officers, employees or agents and provide all documents or other evidence concerning such allegations. The Monitor has full discretion to conduct investigations into any such matters.

As Monitor, Stern will have broad powers, including making recommendations to the Board of Trustees on the hiring or firing of senior management and finance, legal and compliance personnel, and in the hiring of any outside counsel for UMDNJ. Stern will report on at least a quarterly basis to the U.S. Attorney’s Office on UMDNJ’s compliance with the agreement, its implementation of internal controls, financial management and accountability. The first report is due in three months.

Stern will also conduct critical reviews in notable problem areas, including security, email and document retention, as well as no-bid contracts and salaries, bonuses and other compensation and perquisites of UMDNJ senior management.

Other expectations and requirements of UMDNJ include that it cooperate fully with all federal and state law enforcement and regulatory agencies, including the U.S. Attorney’s Office and the Department of Justice, the Office of Inspector General in the Department of Health and Human Services, the FBI, the New Jersey Office of the Attorney General and its agencies, including the Insurance Fraud Prosecutor, as well as other state agencies.

Christie credited Special Agents of the Office of Inspector General, Department of Health and

Human Services, under the direction of Special Agent in Charge Gary Heuer, of the Office of Investigations, New York Regional Office; and Special Agents of the FBI, under the direction of Special Agent in Charge Leslie Wiser, Jr., in Newark, for their respective roles in investigations of UMDNJ.

The case is being prosecuted by Assistant U.S. Attorney Robert Hanna, Chief of the U.S. Attorney’s Office Securities and Health Care Fraud Unit, and Assistant U.S. Attorney Stacey Levine, also of the Securities and Health Care Fraud Unit.

-end-

Counsel for UMDNJ:

Walter F. Timpone, Esq. Morristown