Community Health Systems Inc. to Pay $97 Million to Settle False Claims Act Charge

Community Health Systems will pay $97,257,000.00 to settle whistleblower lawsuits unsealed in federal courts across the country.

Federal officials alleged CHS routinely admitted Medicare patients who presented at their hospitals’ emergency rooms with conditions that did not require admissions so that it could bill Medicare at higher inpatient rates, rather than less expensive outpatient rates.

To drive these valuable inpatient admissions, CHS established benchmarks for the percentage of patients, particularly those over 65, who should be admitted from the emergency room, in a scheme intended to improve its profitability, and without regard to medical necessity or patient safety.

CHS enforced those benchmarks by incentivizing and pressuring emergency department physicians and administrators to meet them. Physicians and administrators who failed to meet CHS’s benchmarks were threatened with termination, and some in fact were fired.

Seven separate whistleblower lawsuits filed against CHS and some of its subsidiaries were resolved with the settlement.

The first four complaints were filed by employees working at different CHS hospitals in various capacities: a case management supervisor, a coding specialist, an emergency room physician, and a director of health information management.

Each of them observed the same practices being directed from CHS’s corporate offices, which practices they felt violated the federal and/or state False Claims.

In addition to the emergency room admission claims that each of the first four whistleblowers identified, CHS also settled the separate claims of one of these whistleblowers, a coding specialist, who discovered additional issues at CHS’s Laredo Medical Center, including routine outpatient procedures being billed at inflated rates to Medicare as inpatient procedures and a kickback scheme to reward doctors for admissions in violation of the Anti‐Kickback Statute.

The whistleblowers brought their claims against CHS under the False Claims Acts, which encourages private citizens to report fraud against the government by allowing them to sue on behalf of the government and receive a share of any recovery.

The False Claims Act also allows the government to join and prosecute such lawsuits, as the Department of Justice did in this case.

The Department of Justice joined the whistleblowers in pursuing those allegations through a multi‐year, nationwide investigation resulting in the settlement.

In early 2011, at the request of the Department, the first four whistleblowers and their counsel joined together as a team to coordinate their efforts to assist the Department with its investigation. As part of the agreement, CHS entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services – Office of Inspector General (HHS-OIG), requiring the company to engage in significant compliance efforts over the next five years.

Under the agreement, CHS is required to retain independent review organizations to review the accuracy of the company’s claims for inpatient services furnished to federal health care program beneficiary.

The whistleblowers are:

Kathleen Bryant, former Director of Health Information Management at CHS’s Heritage Medical Center in Shelbyville, Tennessee;

Rachel Bryant, former nurse at CHS’s Dyersburg Hospital in Dyersburg, Tennessee;

Bryan Carnithan, former Emergency Medical Services Coordinator at CHS’ Heartland Hospital in Marion, Illinois;

Amy Cook-Reska, former coder for CHS’ LMC in Laredo; Sheree Cook, former nurse at CHS’s Heritage Medical Center in Shelbyville;

James Doghramji, former internal medicine and emergency room physician at CHS’s Chestnut Hill Hospital in Philadelphia;

Thomas Mason, former emergency room physician at Lake Norman Regional Medical Center in Mooresville, North Carolina;

Scott Plantz, former emergency room physician at CHS’s Longview Regional Medical Center in Longview, Texas; and

Nancy Reuille, former nurse and Supervisor of Case Management at CHS’s Lutheran Hospital in Fort Wayne, Indiana.

The relators’ share of the settlement has not yet been determined.

“These cases provide the perfect example of the effectiveness of the False Claims Act when whistleblowers and their attorneys work cooperatively together with the government to prosecute a massive, nationwide scheme,” said Patrick O’Connell of O’Connell & Soifer.

“CHS’s conduct interfered with physician decision‐making for the purpose of bolstering its bottom line at the expense of the American taxpayers,” said Matthew Organ of Goldberg Kohn. “As our clients recognized, that kind of corporate conduct needs to be stopped. We are gratified that the government agreed. The one and only factor that should influence a physician’s decision to admit a patient to the hospital should be the patient’s best interest — not the amount of money the hospital can earn.”

CHS is one of the largest for‐profit hospital chains in the nation, with 208 hospitals in 29 states.

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