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http://www.nytimes.com/2005/12/30/nyregion/30medical.html?pagewanted=all
By DAVID KOCIENIEWSKI
New York Times
Published December 30, 2005
NEWARK, Dec. 29 - One of the nation's largest health care universities, the University of Medicine and Dentistry of New Jersey, agreed on Thursday to give a federal monitor sweeping oversight of its finances and management to avoid criminal prosecution for fraud.
The United States attorney for New Jersey, Christopher J. Christie, said his investigation found that the university had defrauded the federal and state governments of at least $4.9 million in a scheme that involved the "purposeful overbilling of Medicaid."
Senior administrators at the university were aware of the fraudulent billing for years, he said, yet allowed it to continue until November 2004.
The university's trustees voted to accept the federal monitor on Thursday after Mr. Christie warned them last week that he had enough evidence to prosecute the university. Such a move would have made it ineligible to receive federal money and would have effectively shut it down.
Patients made more than two million visits to the New Jersey university's health care facilities and faculty members' practices around the state last year, according to the university.
The agreement, which Justice Department officials say is the first instance of a federal monitor's being installed to oversee a public university, does not prevent Mr. Christie from prosecuting university officials responsible for the double-billing or other misdeeds, and he warned the trustees last week that indictments were expected, people who were in the meeting said.
The university's action comes as Mr. Christie continues to investigate allegations of widespread cronyism and insider deals that have exposed the institution's political underside.
Federal prosecutors are investigating allegations that university officials padded the payroll with patronage employees, curried favor by making contributions to elected officials and politically connected charities, doled out hundreds of millions of dollars in no-bid contracts, some for which no work appears to have been done, and awarded huge salaries and bonuses to top officials.
Mr. Christie said that he hoped the agreement would help President John J. Petillo overhaul the university's management and fiscal practices, and restore the image of an institution that is now widely viewed as a monument to New Jersey's nefarious political culture. But he acknowledged that the scope and severity of the university's questionable practices meant that the investigation was likely to intensify in the coming months.
Dr. Petillo has said he welcomes the monitor so the institution can move forward. And Mr. Christie said he intended to help the university turn the page on its scandal. "But it's a big page, so it's going to take a while," he said.
The agreement, which went into effect immediately on Thursday, is likely to cause little disruption to the patients treated at the university's hospitals, or to its 4,500 students or 11,000 full-time faculty and staff members. In a meeting with more than 100 faculty members and managers on Wednesday, Mr. Christie assured them that the monitor would oversee only the institution's finances and leave the academic and medical decisions in the hands of educators and doctors.
But the move to install a federal monitor has already bought changes: Last week, two days after Mr. Christie confronted the board of trustees, the university's chief counsel and two compliance officers were pressured to resign.
When he begins his duties as monitor next week, Herbert J. Stern, a former United States attorney, will have far-reaching influence to shape the way the university conducts business. He will have access to financial documents, background information about vendors and companies that bid for university contracts, and the power to make recommendations to the board regarding the hiring or firing of senior management.
But his most powerful tool will be the shadow of the United States attorney, who could move forward with the criminal complaint he filed in federal district court on Thursday if the university balks at overhauling its operations. Mr. Stern will send a written assessment of the institution's progress to Mr. Christie every three months.
One crucial appointment will be to fill a new position of chief compliance officer, which the university agreed to create as part of its agreement with prosecutors.
The terms of the agreement, which were negotiated in part by Acting Gov. Richard J. Codey, call for the monitor to oversee the university for two years, and allow the United States attorney the option of extending it an additional year if necessary.
"Ultimately, this will help U.M.D.N.J. regain its focusing on its real mission providing health care and educating our future doctors and nurses," Mr. Codey said.
According to a criminal complaint filed by prosecutors, university officials learned in May 2001 that its physicians and outpatient clinics were routinely billing Medicaid for the same services. The university's legal department hired an outside law firm to examine the issue, and the university was repeatedly warned that it was double-billing Medicaid by millions of dollars and should report, and repay, the double payments.
Yet it was not until November 2004 that senior university officials reported the irregularities to Medicaid and informed employees and clinics to stop double-billing.
The university, founded in 1970, has five campuses around the state, though prosecutors have focused their attention on the Newark campus. The university calls itself the "largest institution of is kind in the nation," with schools of medicine, osteopathic medicine, dentistry, biomedical sciences, health-related professions, nursing and public health. The university ranked 65th among the top 100 colleges, universities and nonprofit institutions receiving federal funds in 2002 for science and engineering, with $112 million, according to a March report by the National Science Foundation.
At the university's soaring headquarters in Newark, many administrators seemed relieved and hopeful that the appointment of the monitor would help ease the political infighting that has wracked the board of trustees in recent months.
As headlines about alleged financial irregularities have swirled around the university, its board and administrators have faced a barrage of criticism and some legislators, and newspaper editorials, have called for Dr. Petillo to resign, saying that he has been too slow to change the institution.
But Dr. Petillo, who was appointed university president by former Gov. James E. McGreevey, said he welcomed the monitor as an ally in his effort to revamp the way the university oversees its spending.
"There have been administrative practices that became part of this institution's culture that are unacceptable," he said to the trustees, shortly after they approved the agreement to bring in a monitor. "Reforms have been enacted. But more need to be and will be implemented."
By DAVID KOCIENIEWSKI
New York Times
Published December 30, 2005
NEWARK, Dec. 29 - One of the nation's largest health care universities, the University of Medicine and Dentistry of New Jersey, agreed on Thursday to give a federal monitor sweeping oversight of its finances and management to avoid criminal prosecution for fraud.
The United States attorney for New Jersey, Christopher J. Christie, said his investigation found that the university had defrauded the federal and state governments of at least $4.9 million in a scheme that involved the "purposeful overbilling of Medicaid."
Senior administrators at the university were aware of the fraudulent billing for years, he said, yet allowed it to continue until November 2004.
The university's trustees voted to accept the federal monitor on Thursday after Mr. Christie warned them last week that he had enough evidence to prosecute the university. Such a move would have made it ineligible to receive federal money and would have effectively shut it down.
Patients made more than two million visits to the New Jersey university's health care facilities and faculty members' practices around the state last year, according to the university.
The agreement, which Justice Department officials say is the first instance of a federal monitor's being installed to oversee a public university, does not prevent Mr. Christie from prosecuting university officials responsible for the double-billing or other misdeeds, and he warned the trustees last week that indictments were expected, people who were in the meeting said.
The university's action comes as Mr. Christie continues to investigate allegations of widespread cronyism and insider deals that have exposed the institution's political underside.
Federal prosecutors are investigating allegations that university officials padded the payroll with patronage employees, curried favor by making contributions to elected officials and politically connected charities, doled out hundreds of millions of dollars in no-bid contracts, some for which no work appears to have been done, and awarded huge salaries and bonuses to top officials.
Mr. Christie said that he hoped the agreement would help President John J. Petillo overhaul the university's management and fiscal practices, and restore the image of an institution that is now widely viewed as a monument to New Jersey's nefarious political culture. But he acknowledged that the scope and severity of the university's questionable practices meant that the investigation was likely to intensify in the coming months.
Dr. Petillo has said he welcomes the monitor so the institution can move forward. And Mr. Christie said he intended to help the university turn the page on its scandal. "But it's a big page, so it's going to take a while," he said.
The agreement, which went into effect immediately on Thursday, is likely to cause little disruption to the patients treated at the university's hospitals, or to its 4,500 students or 11,000 full-time faculty and staff members. In a meeting with more than 100 faculty members and managers on Wednesday, Mr. Christie assured them that the monitor would oversee only the institution's finances and leave the academic and medical decisions in the hands of educators and doctors.
But the move to install a federal monitor has already bought changes: Last week, two days after Mr. Christie confronted the board of trustees, the university's chief counsel and two compliance officers were pressured to resign.
When he begins his duties as monitor next week, Herbert J. Stern, a former United States attorney, will have far-reaching influence to shape the way the university conducts business. He will have access to financial documents, background information about vendors and companies that bid for university contracts, and the power to make recommendations to the board regarding the hiring or firing of senior management.
But his most powerful tool will be the shadow of the United States attorney, who could move forward with the criminal complaint he filed in federal district court on Thursday if the university balks at overhauling its operations. Mr. Stern will send a written assessment of the institution's progress to Mr. Christie every three months.
One crucial appointment will be to fill a new position of chief compliance officer, which the university agreed to create as part of its agreement with prosecutors.
The terms of the agreement, which were negotiated in part by Acting Gov. Richard J. Codey, call for the monitor to oversee the university for two years, and allow the United States attorney the option of extending it an additional year if necessary.
"Ultimately, this will help U.M.D.N.J. regain its focusing on its real mission providing health care and educating our future doctors and nurses," Mr. Codey said.
According to a criminal complaint filed by prosecutors, university officials learned in May 2001 that its physicians and outpatient clinics were routinely billing Medicaid for the same services. The university's legal department hired an outside law firm to examine the issue, and the university was repeatedly warned that it was double-billing Medicaid by millions of dollars and should report, and repay, the double payments.
Yet it was not until November 2004 that senior university officials reported the irregularities to Medicaid and informed employees and clinics to stop double-billing.
The university, founded in 1970, has five campuses around the state, though prosecutors have focused their attention on the Newark campus. The university calls itself the "largest institution of is kind in the nation," with schools of medicine, osteopathic medicine, dentistry, biomedical sciences, health-related professions, nursing and public health. The university ranked 65th among the top 100 colleges, universities and nonprofit institutions receiving federal funds in 2002 for science and engineering, with $112 million, according to a March report by the National Science Foundation.
At the university's soaring headquarters in Newark, many administrators seemed relieved and hopeful that the appointment of the monitor would help ease the political infighting that has wracked the board of trustees in recent months.
As headlines about alleged financial irregularities have swirled around the university, its board and administrators have faced a barrage of criticism and some legislators, and newspaper editorials, have called for Dr. Petillo to resign, saying that he has been too slow to change the institution.
But Dr. Petillo, who was appointed university president by former Gov. James E. McGreevey, said he welcomed the monitor as an ally in his effort to revamp the way the university oversees its spending.
"There have been administrative practices that became part of this institution's culture that are unacceptable," he said to the trustees, shortly after they approved the agreement to bring in a monitor. "Reforms have been enacted. But more need to be and will be implemented."
