Community Health Network Pays $345 Million to Settle Stark Law Case
Community Health Network Inc., based in Indianapolis, recently settled with the U.S. government for $345 million, addressing allegations under the False Claims Act related to the Stark Law. This landmark case emphasizes the importance of whistleblowers to combat Medicare fraud.
The Stark Law prevents hospitals from billing Medicare for services referred by physicians who have a financial relationship with the hospital, barring specific exceptions. This law is pivotal in ensuring that physician compensation is based on fair market value and not influenced by the volume of referrals.
In this high-profile lawsuit, Community Health Network faced accusations of overpaying specialists, such as cardiologists and surgeons, and tying bonuses to referral numbers, leading to claims submissions that violated the Stark Law. The complaint detailed an alleged scheme initiated around 2008, where Community recruited physicians with significantly higher salaries than their private practices offered, sometimes up to double. The network was accused of manipulating compensation figures for favorable evaluations and ignoring legal warnings regarding physician overcompensation.
“The Stark Law was enacted to ensure that the clinical judgment of physicians is not corrupted by improper financial incentives,” said Principal Deputy Assistant Attorney General Brian M. Boynton. This statement underscores the law’s aim to safeguard medical decision-making from financial biases.
The implications of this case extend beyond the substantial financial settlement. U.S. Attorney Zachary A. Myers expressed the essence of the issue: “Hoosier Medicare patients deserve to know that their care is based on their medical needs, not their doctor’s financial gain.” He emphasized the erosion of patient trust and the incentivization of unnecessary medical services due to such compensation arrangements.
Following the settlement, Community will engage in a five-year Corporate Integrity Agreement with the Health and Human Services Office of Inspector General (HHS-OIG), ensuring continued compliance and oversight.
The case originated from a whistleblower complaint filed by CHN’s former Chief Financial and Chief Operating Officer Thomas Fischer, highlighting the role individuals can play in uncovering and addressing healthcare fraud.
Community Health Network’s settlement is a reminder of the legal and ethical standards governing healthcare. It stresses the necessity for healthcare entities to rigorously comply with laws like the Stark Law, reinforcing the balance between healthcare business practices and the primacy of patient care.
If you would like to learn more about the False Claims Act whistleblower programs, or any of the government’s other whistleblower rewards programs, please do not hesitate to contact us. We will connect you with a member of our experienced whistleblower lawyer team for a free and confidential consultation.
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