Community Health Systems Agrees to Pay $98 million to Settle Whistleblower Claims

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Community Health Systems, Inc., the nation’s largest operator of acute care hospitals, has reached a $98.15 million settlement to resolve seven whistleblower lawsuits alleging that the company submitted false claims to government health care programs. According to the Charlotte Observer, CHS is based in Franklin, Tennessee and is affiliated with 206 hospitals in 29 states.

In 2010, two doctors filed a lawsuit in the U.S. District Court in Charlotte against Lake Norman Regional Medical Center, David Regional Medical Center and Health Management Associates (the owners at the time). One of the doctors worked as medical director at Lake Norman emergency department from 1997 to 2010 and the other worked as medical director at the Davis Regional’s emergency department from 2000 to 2008. When they did not accept “illegal cash inducements” and did not comply with “corporate benchmarks” to boost profits, they were fired, the suit alleged.

Other whistleblowers lawsuits with similar allegations were also resolved through the settlement. They were filed under the False Claims Act, which allows individuals to sue on behalf of the government when they have knowledge of wrongdoing. If the case is successful, they are entitled to a portion of the funds recovered.

The Lake Norman medical director was singled out and praised for his whistleblower efforts. The government stated that his actions were “essential to detecting and stopping fraud against government health care programs and recovering public funds.”

According to the U.S. Department of Justice, Community Health Systems took part in “a deliberate, corporate-driven scheme” to increase the number of inpatient admissions to Medicare, Medicaid and Department of Defense TRICARE program beneficiaries at its hospitals. They did this by falsely billing government health care programs as inpatient when they really should have been outpatient or “observation”. There was no medical basis for the inpatient admissions, and those patients should have received care somewhere else, the federal government said.

The settlement required CHS to enter into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services; the company must maintain independent review organizations keep track of the company’s inpatient service claims submitted to federal health care programs.