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On June 21, the Department of Justice announced that Overlook Hospital has agreed to pay $9 Million to settle allegations of Medicare fraud brought under the False Claims Act. The settlement partially resolves a whistleblower case filed in 2008 by a former employee of the hospital. Located in New Jersey, Overlook Hospital is owned by AHS Hospital Corporation and Atlantic Health Systems Inc.

The hospital allegedly overbilled Medicare for patients who were treated on an inpatient basis, when they should have been treated on observation status, or as an outpatient. Inpatient status requires that a patient be formally admitted to the hospital with a doctor's order. All other patients are treated as observation patients or outpatients. Unnecessarily treating patients on an inpatient basis significantly increases the bill to Medicare, and subjects patients to the inconvenience and risk associated with potentially lengthier hospital stays.

Unnecessary hospital admissions, like those alleged in this case, have recently become the subject of increased government scrutiny.