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Community Health agrees to pay $345M to settle ‘false claims’ lawsuit

Community Health Network agreed to pay $345 million to the US government in order to resolve charges that it participated in a multi-year program to hire doctors and provide them enormous compensation and incentives in exchange for “downstream referrals” on medical procedures.

According to the U.S. Department of Justice, the agreement resolves claims made on Tuesday that Community Health’s senior management paid hundreds of local doctors salaries that were often double what they were earning in their own private practices when they recruited them as early as 2008.

According to the Justice Department, Community filed an undisclosed number of Medicare claims for services that came about as a result of the illegal referrals.

In written remarks, Brian Boynton, head of the Justice Department’s Civil Division, stated that the act in question violated the Stark Law, a federal statute that forbids hospitals from billing for certain services referred by physicians with whom the hospital has a financial relationship unless the physicians’ compensation is consistent with fair market value and not based on the value or volume of their referrals to the hospital.

"Today's recovery demonstrates the Department's resolve to protect the integrity of federal health care programs and to safeguard the taxpayer dollars used to support these important programs"


Indianapolis Business Journal sent an email and called local officials, but they did not answer right away.

It has previously maintained that it cooperated with the inquiry and referred to the government’s accusation as “meritless.” It expressed dissatisfaction with the Justice Department’s complaint filing.

Thomas Fischer, Community Health’s chief financial officer from 2005 until his abrupt departure in 2013, assisted in exposing the scam. Fischer claimed that his firing was a result of reprisals for his persistent inquiries over the high wages that the health system was still paying in the midst of a cost-cutting drive and a market slump.

Following Fischer’s 2014 whistleblower report, the Department of Justice stepped in and assumed control of the case. Fischer is entitled to a portion of the settlement under federal law, but the Justice Department stated that his share has not yet been decided.

Fischer expressed gratitude for his recovery in a statement on Tuesday

“These claims are not mere technicalities; they directly affect patients, hospital employees and the high cost of health care. This puts money back into the healthcare system and is a victory for the Indiana taxpayer.”


The Stark Law False Claims Act payment of $345 million is approximately three times more than any previous settlement, according to Fischer’s legal firm, Joseph Greenwald & Laake P.A.

The dispute against Community, which has carried on for more than nine years and involves more than 700 files in the court docket, may be resolved in large part due to the settlement deal. However, Fischer’s attorneys stated that they intend to keep pursuing recovery for a few matters for which the Justice Department rejected their assertions.

In addition to hundreds of clinics, surgical centers, and urgent care facilities, Community Health also runs eight hospitals.

According to the Justice Department, Community paid “well above fair market value” to its cardiologists, cardiothoracic surgeons, vascular surgeons, neurosurgeons, and breast surgeons. It stated that the Community gave doctors compensation based on how many recommendations they made.

According to the government, Community even recruited valuation companies to examine the remuneration since it was fully aware of the provisions of the Stark Law regarding physician compensation. One of the companies, Katz Sapper & Miller, located in Indianapolis, came to the conclusion that the pay was “high compared to productivity in all specialties and primary care” and “staggering.”

The other, Chicago-based Sullivan Cotter, discovered that the wages had to go below the 75th percentile of the country’s benchmark salary statistics because they were beyond fair-market value.

Nevertheless, the Justice Department said that Community “knowingly provided the firm with false compensation figures so that the firm would render a favorable opinion.”

It further stated, “Community ignored repeated warnings from the valuation firm regarding the legal perils of overcompensating the physicians.”

Zachary Myers, the United States attorney for the Southern District of Indiana, stated in a statement that 

"Hoosier Medicare patients deserve to know that their care is based on their medical needs, not their doctor's financial gain. When doctors refer patients for CT scans, mammograms, or any other service, those patients should know the doctor is putting their medical interests first and not their profit margins.”


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