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National Hospital Chain Settles Whistleblower Lawsuits for $98 Million

Aug 13, 2014

The largest operator of acute care hospitals, Community Health Systems Inc., has agreed to pay $98.15 million to settle seven whistleblower lawsuits, including one brought by the former medical director of the emergency department at Lake Norman Regional Medical Center in Mooresville, South Carolina.

The lawsuits alleged that Community Health Systems knowingly billed government health care programs for inpatient services that should have been billed as outpatient or “observation” services, the Charlotte Observer reports. Community Health Systems operates 206 affiliated hospitals in 29 states. From 2005 to 2010, the Justice Department said, CHS engaged in “a deliberate, corporate-driven scheme” to increase inpatient admissions of Medicare, Medicaid and Department of Defense TRICARE program beneficiaries at its hospitals. The lawsuits contend the admissions were medically unnecessary and the patients should have received the care elsewhere.

Under the settlement, CHS entered a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services. Any claims for inpatient services made to federal health care programs will be monitored for accuracy, according to the Observer. The agreement contains no finding of improper conduct by Community Health Systems or its affiliated hospitals, and the company has denied any wrongdoing.

Federal prosecutors said Dr. Thomas Mason, of Mid-Atlantic Emergency Medical Associates in Charlotte provided key help to the Justice Department. U.S. Attorney Anne Tompkins said, “Information from citizens like Dr. Mason and the work of their legal representation is essential to detecting and stopping fraud against government health care programs and recovering public funds.” Mason and eight other whistleblowers filed suits under provisions of the False Claims Act, which permits private parties to sue on behalf of the government and receive part of the money the government recovers.

Dr. Mason and Dr. Steven Folstad filed suit in 2010 in U.S. District Court, claiming their group’s contracts to provide emergency care at the hospitals were terminated in 2010 because they refused to accept “illegal cash inducements” and resisted pressure to meet “corporate benchmarks” to maximize profits, the Observer reports.

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