Community Health accused of improper Medicare claims in federal lawsuit

The United States government has filed a complaint against Community Health Network, alleging the central Indiana health care system submitted false claims to the Medicare program. Community, however, is calling the claims “meritless.”

The complaint, filed in the U.S. District Court for the Southern District of Indiana, alleges Community violated the Stark Law, which prohibits a hospital from billing Medicare for services referred by a physician with whom the hospital has an improper financial relationship that does not meet any statutory or regulatory exception. The lawsuit was announced Tuesday by the Indiana Southern District United States Attorney’s office.

In its complaint, the government alleges Community had employment relationships with numerous physicians that did not meet any Stark Law exception because the compensation it paid them was “well above fair market value.” Likewise, the government alleges Community conditioned paying bonuses on physicians achieving a minimum target of referral revenues to the hospital.

Further, the complaint asserts Community received referrals from the physicians in violation of the Stark Law and submitted claims to Medicare knowing the claims for those referred services were not eligible for payment. As a result, the complaint alleges, Community received millions of dollars in Medicare reimbursement to which it was not entitled.

“Improper financial relationships between hospitals and physicians corrupt clinical decision-making, threaten patient care, and ultimately drive up Medicare costs,” assistant attorney general Jody Hunt of the Department of Justice’s Civil Division said in a statement.  “We are committed to eliminating these improper inducements and thereby ensuring the Medicare program remains fiscally sound to serve our nation’s senior citizens.”

The government filed its complaint in a lawsuit originally filed under the qui tam or whistleblower provisions of the False Claims Act. The act permits the U.S. to intervene and take over the lawsuit, which the government has done in part in the case at hand, according to the DOJ.

The U.S. seeks to recover treble damages and civil penalties under the False Claims Act, as well as damages under the common law or equitable theories of payment by mistake and unjust enrichment, according to the complaint.

“Our goal at the U.S. Attorney’s Office is to serve the citizens and help ensure safety in their communities,” Indiana Southern District U.S. Attorney Josh Minkler said in a statement. “Hospitals are responsible for not only the health and well-being of their patients, but are also required to establish a compliance program in order to protect against improper payments, fraud and abuse as a condition of enrollment in the Medicare program.”

The case, United States of America, ex rel. Thomas Fischer v. Community Health Network, Inc., 1:14-cv-1215, is being handled by the DOJ’s Civil Division and the Indiana Southern District attorney’s office, with assistance from the Office of Inspector General of the Department of Health and Human Services.

In a statement emailed to Indiana Lawyer, a Community Health Network spokeswoman said Community had “cooperated fully with the government’s requests leading up to this point, and we are disappointed with their decision. We believe that it is a waste of the government’s time and resources to pursue these meritless claims.”

“This lawsuit involves certain administrative issues that are completely unrelated to patient care,” the company said. “We are confident that we have complied with the laws and regulations that govern the way we operate our health network. We are committed to fighting these allegations which have no merit.

“… Community recognizes that physician compensation is very complex and highly regulated. Our physician compensation practices are a key part of our overall compliance efforts,” the statement continued. “We are confident that we operate in a legally compliant manner. To ensure compliance, as is standard in the industry, Community uses a variety of resources including independent, third parties to evaluate physician compensation to ensure it is fair, as the law requires.”