Whistleblower Case Results in $98 Million Settlement by Community Health Systems Inc.

Community Health Systems Inc., the largest operator of acute care hospitals in the United States, agreed to pay $98 million in a settlement announced today by the U.S. Department of Justice.

Whistleblower Case Results in $98 Million Settlement by Community Health Systems Inc.

Seven False Claims Act Whistleblower Lawsuits

The settlement allowed the healthcare giant to resolve seven lawsuits filed by nine whistleblowers under the U.S. False Claims Act that alleged Community Health Systems had intentionally billed federal healthcare programs (Medicare and Medicaid) incorrectly at 119 different hospitals between 2005 and 2010, resulting in additional profits for Community Health Systems Inc. and higher costs to the government.

Among the claims were allegations that hospitals run by Community Health Systems Inc. billed the federal programs for more costly inpatient procedures when less costly outpatient procedures or observations would have been more appropriate.

According to the United States Department of Justice website, the Community Health Systems Inc. allegedly encouraged those who were receiving aid from Medicare, Medicaid, and the TRICARE program for the Department of Defense, especially those who were over 65, to accept excessive or medically unnecessary care after admittance to the emergency department at these 119 hospitals, when less expensive alternatives would have been a better option.

DOJ Decries Making Medical Decisions by Profit Margins

Community Health Systems, Inc. was accused of knowingly engaging in a “deliberate corporate-driven scheme”, and admitting beneficiaries of government medical programs unnecessarily.

U.S. Attorney Anne M. Tompkins for the Western District of North Carolina said, “Healthcare providers should make treatment decisions based on patients’ medical needs, not profit margins. We will not allow this type of misconduct to compromise the integrity of our healthcare system.”

Each of the seven lawsuits that were settled with the $98 million arose under the U.S. False Claims Act, which allows private citizens, also known as whistleblowers, to initiate lawsuits on behalf of the government in exchange for a 10 to 30 percent piece of the resulting settlement.

Physician and Nurse Whistleblowers to Split Up to $30 Million

In this case, nine whistleblowers had filed seven lawsuits, and could soon be awarded up to $30 million.

The Community Health Systems employee and ex-employee whistleblowers were Nancy Reuille, Scott Plantz, Thomas Mason, James Doghramji, Amy Cook-Reska, Sheree Cook, Bryan Carnithan, Rachel Bryant, and Kathleen Bryant.

In order to qualify as a whistleblower and to be eligible for a portion of the settlement, a person needs to have original source information. The whistleblowers Reuille, Plantz, Mason, Doghramji, Cook-Reska, Cook, Carnithan, Bryant, and Bryant in Community Health Systems cases were nurses, physicians, and administrators who were privy to first-hand knowledge relating to the case.

Assistant Attorney General Stuart F. Delery from the Civil Division of the Justice Department said, “Charging the government for higher cost inpatient services that patients do not need wastes the country’s healthcare resources.” Delery specifically denounced the company’s actions adding, “Providing physicians with financial incentives to refer patients compromises medical judgment and risks depriving patients of the most appropriate healthcare available.”

Department of Justice Focus on Healthcare Fraud

One U.S. attorney, Kenneth Magidson, pointed to these False Claims Act results as examples of the DOJ’s focus on healthcare fraud. “Put simply, these types of fraudulent practices will not be tolerated and the investigation and resolution of such claims will continue to be a high priority in this office.”

Community Health Systems Inc. is based in Franklin, Tennessee, and operates 206 hospitals spread across 29 states. This settlement did not require Community Health Systems Inc. to admit any guilt or wrongdoing and no determination of liability has been made according to the DOJ.

A Department of Justice press release notes that since January 2009 more than $14 billion has been recovered by False Claims Act cases involving fraud against federal health care programs.

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