Hospital company will pay $98M over billing issues

Community Health Systems denies any wrongdoing

Community Health Systems has reached a settlement with the U.S. Justice Department under which the company will pay about $98 million after allegations of improper hospital billing.

The case relates to the company’s hospitals inappropriately admitting emergency room patients who should have been released, the government alleged. It involved patients at 119 CHS hospitals.

Grant & Eisenhofer represented several whistleblowers in the case, including Dr. James Doghramji, who was an emergency room physician at Philadelphia’s Chestnut Hill Hospital. His attorney, Reuben Guttman, who heads up Grant & Eisenhofer’s whistleblower practice, said in a statement, “The allegations supporting this lawsuit tell the story of a large publicly traded for-profit hospital chain gobbling up local community hospitals and running them with an eye toward financing their acquisitions by a scheme to bill the government for unnecessary medical services.”

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The company is one of the nation’s largest for-profit hospital chains.

“The scheme that these whistleblowers brought to light defrauded the Medicare system and compromised patient safety by unnecessarily hospitalizing individuals at CHS hospitals nationwide,” Guttman added.  “Legitimate patients in need of proper medical care and attention surely suffered as a result of CHS resources being directed to tend to individuals who were filling beds solely to run up steep charges for the parent company.”

Investigations took place at CHS hospitals in Tennessee, Alabama, Arizona, Arkansas, California, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Mississippi, New Jersey, New Mexico, North Carolina, Oklahoma, Pennsylvania, South Carolina, Texas and Virginia. 

“The necessary and intended result of CHS’s wrongful conduct has been a massive number of false and/or fraudulent claims by CHS hospitals across the country,” according to allegations made in the case.

Other law firms in the case include Cohen Millstein Sellers & Toll PLLC and Barrett, Johnston, Martin & Garrison.

The hospitals billed Medicare, Medicaid and TRICARE for inpatient admissions between January 2005 and December 2010.

“The settlement agreement reflects the Company’s desire to end the investigation, which began in 2011, and to avoid the significant expense and distraction of litigation,” the company said in a statement.

Under the agreement, there is no finding of improper conduct by Community Health Systems or its affiliated hospitals, and the company denies any wrongdoing.

Commenting on the agreement, company CEO Wayne T. Smith said, “Our organization is dedicated to high ethical standards as we strive to operate in a complex and ever changing regulatory environment. The question of when a patient should be admitted to a hospital is, and always has been, a matter of medical judgment by the individual physician responsible for a patient’s care. Unfortunately, shifting and often ambiguous standards make it extremely difficult for physicians and hospitals to consistently comply with the regulations. We are committed to doing our best, despite these challenges. Because this is an industry-wide issue, we hope the government will work to devise sound and reasonable rules for the important decision about whether to admit an individual for inpatient care, and we appreciate the opportunity to engage in meaningful dialogue with the government over these incredibly complicated issues.”

Under the settlement, whistleblower cases filed in Illinois, Tennessee, North Carolina, Texas and Indiana also will be dismissed, according to news reports.

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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