New Jersey-based Cooper Health System will pay $12.6 million to settle allegations that it violated the False Claims Act.

The qui tam lawsuit against Cooper was originally filed by cardiologist Dr. Nicholas L. DePace.

The DePace lawsuit sparked a multi-year investigation by the United States Department of Justice and the New Jersey Attorney General’s Office.

DePace was represented by Pietragallo Gordon of Philadelphia.

The qui tam lawsuit filed in federal district court in New Jersey in 2008 by Dr. DePace alleged that the Cooper Health System and Cooper University Hospital paid millions of dollars in illegal kickbacks to physicians to induce them to refer patients to Cooper for expensive in-patient and out-patient cardiac services.

“Payments to outside physicians by hospitals require heightened scrutiny because those payments may be improper if they are based on patient referrals,” said U.S. Attorney Paul Fishman. “Such kickback arrangements interfere with the physician-patient relationship and can lead to problems of overutilization and increased costs. Federal health care participants, such as Cooper, who run afoul of the prohibitions against kickbacks must be held responsible.”

The settlement is one of the largest against a hospital for operating an illegal kickback scheme.

It is also one of the largest recoveries for the State of New Jersey under its state False Claims Act.