Community Health Network will pay $345 million to settle allegations it overbilled Medicare and broke laws prohibiting self-referrals, the Justice Department announced Tuesday.
The agreement stems from a 2014 whistleblower complaint filed by Thomas Fischer, the nonprofit provider's former chief financial officer and chief operating officer. He alleged violations of the federal Stark Law that bars hospitals from billing for certain services referred by physicians with whom hospitals have financial relationships. The Justice Department joined the case in 2020.
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Community Health Network, based in Indianapolis, will also enter into a five-year corporate integrity agreement with the Health and Human Services Department inspector general, the Justice Department said in a news release.
Community Health Network will use its reserves to pay the settlement, which does not represent an admission of guilt, spokesperson Kris Kirschner said in a statement. The nonprofit health system will continue to vigorously defend itself against additional pending claims by Fischer, she said.
"This is completely unrelated to the quality and appropriateness of the care Community provided to patients," Kirschner said. "This settlement, like those involving other health systems and hospitals, relates to the complex, highly regulated area of physician compensation. Community has consistently prioritized the highest regulatory and ethical standards in all our business processes."
The Justice Department partially intervened in 2020, alleging Community Health Network began recruiting physicians with the intent of generating lucrative referrals in 2008. The 200-site network paid cardiologists, neurosurgeons, vascular surgeons and other doctors more than double the fair market rate, the Justice Department said. Community Health Network also awarded bonuses for referrals, according to prosecutors.
“Such compensation arrangements erode patient trust and incentivize unnecessary medical services that waste taxpayer dollars,” U.S. Attorney Zachary Myers said in the news release.
Fischer’s share of the settlement as a whistleblower has not been determined, the Justice Department said in the news release.
