INDIANAPOLIS — Community Health Network, based out of Indianapolis, has reached a historic settlement with the United States after a complaint filed by the United States Department of Justice claimed the healthcare network of violating the False Claims Act.
According to court documents, the Department of Justice claimed Community Health management began an illegal scheme in 2008 and 2009 that recruited physicians for employment with the purpose of collecting "downstream referrals."
As a result, the healthcare network will pay the United States $345 million.
"Today's agreement resolves claims that Community overpaid doctors to encourage them to illegally refer patients within the network for much of the past fifteen years," said Zachary Myers, the United States Attorney for the Southern District of Indiana, during a press conference Tuesday.
The complaint alleged Community Health physicians were paid bonuses directly tied to the number of referrals they would submit — which violates The Stark Law. These bonuses pushed the levels of pay of physicians, such as cardiologists, breast surgeons and more, well beyond a fair market value, according to the complaint.
"This result is the largest claims act settlement, based on the Stark Law in the history of the Department of Justice," said Department of Justice civil attorney Brian Boynton. "The False Claims Act is the government's primary civil tool for fighting fraud involving taxpayer funds, including fraudulent schemes affecting federally-funded healthcare programs like Medicare and Medicaid."
The complaint against Community Health Network initially stemmed from a 2014 whistleblower complaint from former Community Health Network Chief Financial and Chief Operating Officer Thomas Fischer.
"I feel vindicated for him and happy for him, but the case is not over," said Fischer's attorney Veronica Nannis, who said Fischer has several claims against Community Health that were not settled in this agreement. "Usually with these cases, we're talking about a handful of doctors, but Mr. Fischer was talking about a widespread pattern of misuing the Stark Law."
The level of pay of physicians is to remain at fair market level to avoid physicians from making medical decisions with their own finances in mind.
“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 medical service, those patients should know the doctor is putting their medical interests first and not their profit margins,” said Myers. “The United States alleged that Community Health Network overpaid its doctors, and that it paid doctors bonuses based on the amount of extra money the hospital was able to bill Medicare through doctor referrals. Such compensation arrangements erode patient trust and incentivize unnecessary medical services that waste taxpayer dollars."
Community Health provided the following statement to WRTV.
This matter involved alleged technical violations regarding the manner in which Community compensated certain employed physicians, dating as far back as 2008. The $345 million settlement will be paid from reserves held by the Network, which reported operating revenue of $3.1 billion in 2022.
“This is completely unrelated to the quality and appropriateness of the care Community provided to patients. 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 civil settlement resolves the government’s claims with no finding of wrongdoing. Community has always sought to compensate employed physicians based on evolving industry best practices with the advice of independent third parties. Community has always sought to provide complete and accurate information to our third-party consultants.
“Community’s caregivers and our services will not be impacted by the settlement. Community’s leadership has ensured the ongoing health and growth of the organization.”
While the settlement resolves claims made by the government, certain claims made by a former employee which the government chose not to pursue remain pending. Community will continue to vigorously defend those claims.
“Community has a bright future. Our commitment to providing exceptional care is unwavering.”