Community Health Systems Will Pay $98 Million In Hospital Fraud Case

Wayne Smith, CEO of Community Health Systems, says the company is upholding ethical standards in an industry with constantly-changing regulations. Credit: CHS

Community Health Systems will pay $98 million in a settlement for allegedly creating a scheme in which patients were admitted to CHS emergency rooms who didn’t need to be hospitalized, the Department of Justice announced on Monday.

CHS, based in Franklin, is one of the largest hospital providers in the country. A lawsuit over the matter claimed that CHS fraudulently billed the government’s Medicare and Medicaid programs to bolster the company’s revenues.

According to prosecutors, the scheme was exposed by a number of whistleblowers in states around the country — among them include nurses from Shelbyville and Dyersburg — who witnessed older patients being improperly admitted to hospitals.

“It resulted in patients who had no business being hospitalized,” said Nashville attorney David Garrison, who represented whistleblowers in the case. “This wasn’t an example of isolated incidents. Across the board, as CHS was acquiring hospitals, one of the ways that they were increasing their value is to engage in a scheme that led to improper admission.”

Nashville’s U.S. Attorney David Rivera said the case represents the largest settlement of its type in the district. “This office is committed to ensuring that all companies billing government health-care 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,” Rivera said in a statement.

Wayne Smith, who heads CHS, said in a statement that the company is dedicated to “high ethical standards” in an industry with regulations that are quickly changing.

“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,” Smith said. “Unfortunately, shifting and often ambiguous standards make it extremely difficult for physicians and hospitals to consistently comply with the regulations.”