U.S. to monitor medical school in N.J.


NEWARK, N.J. --The board of one of the nation's largest health care universities, the University of Medicine and Dentistry of New Jersey, agreed yesterday to allow a federal monitor sweeping oversight of its finances and management to avoid criminal prosecution for health care fraud.

The U.S. attorney for New Jersey, Christopher J. Christie, said his investigation showed 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 decision by the trustees to accept the federal monitor for at least two years came after Christie warned them last week that he had enough evidence to prosecute the university. Such a move would have made the university ineligible to receive federal money and would have effectively shut it down.

Patients made more than 2 million visits to the New Jersey university's care facilities and faculty 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 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 Christie continues to investigate allegations of widespread cronyism and insider deals. 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.

Christie said 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 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 the investigation was likely to intensify in the coming months.

Petillo has said he welcomes the monitor so the institution can move forward. And 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 yesterday, 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 Wednesday, 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 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 U.S. attorney, will have far-reaching influence to shape the way the university conducts business. He will have unfettered 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 imprimatur of the U.S. attorney, who could move forward with the criminal complaint he filed in federal district court yesterday if the university balks at overhauling its operations.

Stern will send a written assessment of the institution's progress to 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.

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