INDIANAPOLIS – The U.S. Department of Justice has filed a federal complaint against Community Health Network, alleging the hospital group submitted false claims to Medicare, resulting in millions of dollars of extra revenue.
The civil complaint filed Tuesday accuses Community Health of violating 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,” according to a release.
The complaint alleges Community Health had employment relationships with a number of physicians which the network paid well above fair market value. Community Health is accused of then conditioning those physicians’ bonus payments on achieving a minimum target of referral revenues to the hospital.
According to court documents, Community Health would receive referrals from these physicians and submit claims to Medicare knowing that the claims were not eligible for payment. That resulted in the network receiving millions of dollars in Medicare reimbursement to which it was not entitled.
Community Howard Regional Health in Kokomo is part of Community Health Network. The hospital was formerly owned by the county but was purchased by Community Health in 2012.
Community Health officials on Tuesday called the complaint “meritless” and said the network has fully cooperated with the government’s requests leading up to the court filing by the Department of Justice.
“We are disappointed with their decision,” hospital spokeswoman Kris Kirschner said in an emailed statement. “We believe that it is a waste of the government’s time and resources to pursue these meritless claims.”
She said the lawsuit involves administrative issues that are unrelated to patient care.
But DOJ officials say Community Health’s actions “corrupt clinical decision-making, threaten patient care and ultimately drive up Medicare costs.”
“We are committed to eliminating these improper inducements and thereby ensuring the Medicare program remains fiscally sound to serve our nation’s senior citizens,” Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division said in a release.
Kirschner said Community Health is also committed to fighting the allegations.
“We are confident that we have complied with the law and regulations that govern the way we pay our physicians for the services they provide to our patients and to the communities we serve,” she said.
Kirschner said Community Health recognizes that physician compensation is very complex and highly regulated, and physician compensation practices are a key part of the network’s overall compliance efforts.
She said to ensure compliance, Community Health uses a variety of resources, including independent third parties, to evaluate physician compensation to ensure it is fair, as is standard in the industry and required by law.
“We are confident that we operate in a legally compliant manner,” she said.
The lawsuit was first filed under the whistleblower provisions of the False Claims Act, which allow private parties to file suit on behalf of the United States for false claims and to receive a share of any recovery.
The whistleblower who filed the complaint was Thomas Fischer, the former chief operating officer and chief financial officer of Community Health Network. He was terminated from the company in November 2013, according to the complaint.
Community Health is based in Indianapolis and includes eight hospitals. Medicare accounts for about one-third of its revenue, and Indiana Medicare accounts for another 10%, according to the complaint.