Community Health unit to pay $260 million to resolve U.S. fraud probe

[September 26, 2018]  By Nate Raymond

(Reuters) - A hospital operator now owned by Community Health Systems Inc will pay more than $260 million to resolve claims it defrauded government healthcare programs and paid doctors kickbacks for patient referrals, the U.S. Justice Department said on Tuesday.

Health Management Associates, which Community Health acquired in 2014, agreed to pay the sum to resolve criminal and civil claims as part of a deal in which a subsidiary also agreed to plead guilty to conspiring to commit healthcare fraud.

Wayne Smith, Community Health's chief executive, said in a statement it had been his company's goal since acquiring HMA to resolve the investigation, which involved issues that occurred before the deal.

"As an organization, we are committed to doing our very best to always comply with the law in what is a very complex regulatory environment and to operate our business with integrity, ethical practices and high standards of conduct," Smith said.

A lawyer for Naples, Florida-based HMA declined to comment.

According to the Justice Department, HMA, beginning in 2008, defrauded government healthcare programs like Medicare and Medicaid by illegally pressuring and inducing doctors into increasing the number of emergency department patient admissions.

Those admissions were made without regard to whether the they were medically necessary, prosecutors said. They said that as a result, HMA hospitals billed healthcare programs for inpatient services that pay more than observation or outpatient care.

The Justice Department said HMA set mandatory admissions rate benchmarks for patients presented at hospital emergency departments in order to boost its revenue and threatened to fire doctors who did not increase admissions.

From 2003 to 2011, two of HMA's hospitals in Florida also billed federal healthcare programs for services referred to them by doctors who received free office space and direct payments in exchange, the Justice Department said.

Two hospitals owned by HMA in Pennsylvania also made excessive payments to a large physician group and a local surgeon in exchange for patient referrals, the Justice Department said.

Under the settlement, HMA entered into a three-year non-prosecution agreement with the Justice Department, while a subsidiary, Carlisle HMA, LLC, agreed to plead guilty to a charge filed in federal court in Washington.

(Reporting by Nate Raymond in Boston; Editing by Cynthia Osterman and Peter Cooney)

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