On August 4th, one of the nation’s largest health system operators, Community Health Systems (CHS), agreed to pay more than $98 million to settle a series of False Claims Act lawsuits. The lawsuits allege that CHS knowingly billed the government for pricey inpatient hospital stays that should have instead been listed as outpatient services. The settlement resolved seven separate whistleblower lawsuits alleging improper billing at 119 CHS hospitals.
Four different CHS employees from various CHS hospital locations originally brought the lawsuits. The employees’ complaints allege that from 2005 to 2010, CHS engaged in a scheme to admit patients to their hospitals’ emergency rooms in situations where less costly, outpatient treatment would have sufficed. CHS knowingly submitted these medically unnecessary charges to Medicare, Medicaid, and the Department of Defense’s TRICARE program for reimbursement, violating the False Claims Act. At the request of the Department of Justice, these first four whistleblowers and their counsel joined together to coordinate their efforts.
The settlement also resolves a lawsuit brought by a fifth employee whistleblower. This compliant alleged that Laredo Medical Center, a CHS affiliate hospital, routinely admitted patients for inpatient treatment of certain cardiac and hemodialysis procedures that should have been done on an outpatient basis in order to collect the higher inpatient fees from Medicare. The same whistleblower’s suit also contends that many of the referrals that led to this improper billing came from a physician who was offered a prestigious directorship position at Laredo Medical Center. These referrals violated Stark Law, which prohibits medical practices from submitting claims for patient referrals made by a physician with whom the medical practice had an improper financial relationship, such as monetary rewards. This law is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives, and is instead based on the best interests of the patient.