Community Health Systems (CHS), one of the nation’s largest publicly traded hospital companies and operators, has settled with the U.S. Department of Justice for $262 million over an investigation of kickback and false billing allegations related to a hospital company it acquired in 2014.
CHS, which acquired Florida-based hospital chain Health Management Associates in a deal valued at $6.7 billion, was slapped with civil claims from the DOJ and an investigation earlier this year. HMA allegedly paid kickbacks to physicians in return for patient referrals, billed the government for inpatient services that should have been billed as outpatient services, and inflated claims for emergency department facility fees.
“HMA pressured emergency room physicians, including through threats of termination, to increase the number of inpatient admissions from emergency departments—even when those admissions were medically unnecessary,” Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, said in a statement. “Hospital operators that improperly influence a physician’s medical decision-making in pursuit of profits do so at their own peril.”
Based in Franklin, Tennessee, CHS owns, leases or operates 118 hospitals in 20 states. It acquired HMA after the alleged behavior took place, according to the DOJ. Over the last few years, CHS has run into debt problems that caused the company to sell off several hospital assets and spinning off more assets into Quorom Health Corporation.
The $262 million payment is expected to be paid in October 2018.
CHS removed the HMA board of directors and senior executives from their positions once HMA was acquired and moved HMA’s affiliated hospitals in CHS’s compliance program. HMA was facing several whistleblower lawsuits and criminal and civil investigations at the time it was acquired.
“Since acquiring HMA in 2014, it has been our goal to resolve the government’s investigation into all of these allegations which occurred prior to the acquisition and which were already under investigation at the time of the transaction,” Wayne Smith, chairman and chief executive officer of CHS, said in a statement. “We are pleased to have reached the settlement agreements so we can move forward now without the burden or distraction of ongoing litigation.”
As part of the settlement, HMA agreed to a three-year Non-Prosecution Agreement with the Justice Department’s Criminal Division Fraud Section, including a $35 million penalty. HMA subsidiary Carlisle HMA, which formerly did business as Carlisle Regional Medical Center, agreed to plead guilty to one count of conspiracy to commit healthcare fraud. HMA also agreed to pay $216 million in a civil settlement.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."