Responding to a request for comment, Community Health Systems issued the following statement:

Community Health Systems, Inc. has learned that the Department of Justice has intervened in a whistleblower suit against the Company and three affiliated hospitals in New Mexico. This decision comes more than three years after the Federal Government began an investigation into the way these hospitals participated in a state program for funding of the Medicaid Sole Community Provider program.

The Sole Community Provider program provides supplemental funding to hospitals located in predominantly remote locations that typically treat more indigent patients. Under the program, the State of New Mexico provides these dollars directly to hospitals to help pay for hospital services provided to indigents. The state relies on intergovernmental transfers from the counties, which have a state statutory funding obligation, to apply for federal matching funds. The counties use a variety of funding sources for these payments, including taxes, general revenues and donations.

In its investigation, the Department of Justice took issue with the way these three hospitals provided funding for local services and made donations to the counties in which they operate.

The Company views this issue as a funding dispute between government agencies. The government has never alleged that the hospitals filed false claims or that they received reimbursement under the Sole Community Provider program for services the hospitals did not provide.

Community Health Systems, Inc. has cooperated with the government’s investigation and is disappointed in the government’s decision to pursue litigation. The company intends to vigorously defend itself and to seek ultimate resolution of this matter.

 

As originally posted:

Yet another of Nashville’s hospital operators is having trouble with Southwestern whistleblowers.

Last week, it was announced that the U.S. Justice Department is set to join a four-year-old lawsuit brought against Franklin-based Community Health Systems by a former employee over an alleged $47.5 million improperly collected from Medicaid.

The complaint lobs allegations at three facilities in New Mexico. According to the plaintiff Robert C. Baker, who worked in CHS’ revenue management department, the hospitals collected “disproportionate share” (DSH) payments to which they were not entitled.

The plaintiffs go on to claim that “CHS worked out arrangements with the local county governments in New Mexico to “donate” money to the counties in amounts calculated to pay all or most of the counties’ share of the disproportionate share payments so that the CHS hospitals would get more federal money.”

If found liable in court, according to “qui tam” mainstay Phillips & Cohen, who filed the original complaint on behalf of Baker, CHS could be forced to pay three times the government’s losses, bringing the total bill to at least $142 million.

Phillips & Cohen has proven somewhat troublesome for other local hospital operators in the past. Several years ago, during HCA’s well-publicized Medicare fraud controversy, the law firm was responsible for $600 million of the $1.7 billion the company agreed to pay.

The firm was also involved in an Arizona suit brought against Franklin-based Iasis Healthcare in 2005. That complaint was dismissed in April of last year.

The Justice Department has asked for 120 days to file its own complaint.