$98M settlement against hospital’s parent company

WASILLA — A $98-million settlement between the company with a partial stake in Mat-Su Valley Regional Medical Center likely won’t impact business here.

That’s because the company has already established a $102-million reserve to pay for the settlement, officials with the company say. The July 31 settlement between the office of the U.S. Attorney in the Middle District of Tennessee and Community Health Systems, Inc., was reached in order to resolve an investigation into allegations that the company knowingly and improperly billed the federal government for certain procedures. The investigation stems in part from whistle-blowers who filed suits in five states and requires the company to participate in a Corporate Integrity Agreement for five years. Those cases were what are known as qui tam agreements, in which a whistleblower is entitled to file on behalf of the government and claim a portion of the settlement. Some of the claims name Health Management Associates, a company acquired by CHS in 2013.

Those claims — as well as a similar suit involving billing practices at a clinic in Laredo, Texas — were also settled as part of the agreement, and the company is not required to admit fault.

Agreements of this kind are legal documents typically requiring the company to hire or appoint a compliance officer or committee, develop written standards and procedures, and develop an employee training program, according to the website of the Office of Inspector General for the Department of U.S. Health and Human Services.

“This is the largest False Claims Act settlement in this district and it reaffirms this office’s commitment to investigate and pursue healthcare fraud that compromises the integrity of our healthcare system,” said David Rivera, the U.S. Attorney for the Middle District of Tennesee, in a statement. “This office is committed to ensuring that all companies billing government healthcare programs are responsible corporate citizens and that hospital providers do not engage in schemes to increase medically unnecessary in-patient admissions of government healthcare program beneficiaries in order to increase profits.”

The company’s annual investor statement shows the company earned $1.8 billion before taxes in 2013. The 2014 report hasn’t yet been issued.

The allegations and ensuing investigation stemmed at least in part from a shifting regulatory environment, said CEO Wayne Smith in a company-issued statement.

“The question of when a patient should be admitted to a hospital is, and always has been, a matter of medical judgment by the individual physician responsible for a patient’s care,” he said. “Unfortunately, shifting and often ambiguous standards make it extremely difficult for physicians and hospitals to consistently comply with the regulations. We are committed to doing our best, despite these challenges. Because this is an industry-wide issue, we hope the government will work to devise sound and reasonable rules for the important decision about whether to admit an individual for inpatient care, and we appreciate the opportunity to engage in meaningful dialogue with the government over these incredibly complicated issues.”