Community Health to pay $345M in settlement

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Community Health Network has agreed to pay $345 million in a settlement with the U.S. government in a case alleging that the health care provider violated the False Claims Act by submitting Medicare claims in violation of the Stark Law. 

According to a Dec. 19 announcement from the U.S. Attorney’s Office Southern District of Indiana, the Stark Law prohibits hospitals from billing Medicare for certain services referred by doctors who have a financial relationship with that hospital, with some exceptions. 

“In this lawsuit, the United States alleged that the compensation Community paid to its cardiologists, cardiothoracic surgeons, vascular surgeons, neurosurgeons and breast surgeons was well above fair market value, that Community awarded bonuses to physicians that were tied to the number of their referrals and that Community submitted claims to Medicare for services that resulted from these unlawful referrals,” the announcement stated. 

The complaint against Community Health Network goes back to 2008 and 2009 and alleges that senior management recruited physicians to capture “downstream referrals,” paying higher than they were making in private practice, and that they knew about the Stark Law requirements.

“Community hired a valuation firm to analyze the compensation it proposed paying to its recruited specialists,” the announcement stated. “The complaint alleged that Community knowingly provided the firm with false compensation figures so that the firm would render a favorable opinion. The complaint further alleged that Community ignored repeated warnings from the valuation firm regarding the legal perils of overcompensating its physicians.”

In a statement released Dec. 19, Community Health Network spokesperson Kris Kirschner stated that the settlement will be paid through the hospital’s reserves, and noted that the complaint is unrelated to quality of care at the hospital. 

Kirschner stated that Community has always sought to compensate physicians based on industry best practices, and to provide complete and accurate information to consultants.

“This settlement, like those involving other health systems and hospitals, relates to the complex, highly regulated area of physician compensation,” Kirschner stated. “Community has consistently prioritized the highest regulatory and ethical standards in all our business processes.” 

Besides paying $345 million, the settlement agreement calls for Community Health to enter into a five-year corporate integrity agreement with the Office of Inspector General for the Department of Health and Human Services. 

The investigation leading to the complaint and settlement stem from a 2014 whistleblower complaint filed by Community Health’s Chief Financial and Chief Operating Officer Thomas Fischer, according to the announcement. The False Claims Act allows Fischer a share of the settlement, but that share has not yet been determined. 

Through the settlement agreement, there is no determination or admission of liability. 


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