Illinois joined a whistle-blower lawsuit alleging that 579-bed University of Chicago Hospitals violated the state False Claims Act and other state laws by "double-bunking" premature infants to reap larger Medicaid reimbursements. In a civil complaint unsealed in U.S. District Court in Chicago, two former nurses in the neonatal intensive-care unit at University of Chicago Comer Children's Hospital alleged that the hospital routinely housed babies in excess of its licensed capacity from 1997 to 2005 because of Medicaid incentives to care for large numbers of severely ill babies.

"Double-bunking" -- housing babies in side-by-side cribs in a space designed for one crib -- violates industry and state guidelines and may increase the risk of infection. The state previously warned the hospital about the practice, according to state files.

UCH spokesman John Easton did not deny the alleged double-bunking but in a statement said the issue was "treating sick babies versus turning them away. Our doctors and nurses, when faced with this choice, made the right decision: to treat these critically ill babies." Easton said many hospitals in the region depend on Comer to accept the transfer of their sickest patients and added that the state "explicitly declined to intervene on any claims based on quality of care."

Illinois said double-bunking falsely represented the quality of care delivered and tainted more than $8 million in Medicaid claims. The state alleged that the hospital had more than 5,300 patient days of double-bunking since 1997.

In a separate complaint that Illinois has not joined, the NICU nurses accused the hospital of creating infection-control problems by regularly exceeding its state-mandated NICU census, said Steven Cohen, a Chicago attorney who represents the nurses