Indiana health network agrees to pay $345 million to settle false claims case

Indianapolis-based Community Health Network has agreed to pay the United States $345 million in a settlement after accusations of submitting false claims to Medicare.

The U.S. Department of Justice alleged Community Health had knowingly submitted claims to Medicare for services in violation of the Stark Law.

The Stark Law prohibits hospitals from billing for certain Medicare services referred by a physician they have an improper financial relationship with. The law allows hospitals to bill for certain Medicare services if the hospital’s compensation for physicians is consistent with fair market value or is not based on the value or volume of referrals to the hospital.

The United States’ complaint said Community Health recruited many local physicians and paid them significantly higher than what they were making at their previous practices. It said this was in an attempt to receive “downstream referrals” and that Community Health was submitting these claims to Medicare knowing they weren’t eligible for payment.

The complaint that led to this lawsuit was filed in 2014 by a former Community Health executive. The United States eventually took over this case.

In a press release, attorneys said Medicare patients deserve to be treated based on their medical needs and physicians receiving financial gain from this need to be held accountable. Some say these practices “erode patient trust” or “incentivize unnecessary medical services.”

Prior to the settlement, Community Health called the government’s efforts “meritless” and a “waste of resources.”

With this settlement, Community Health will pay the federal government $345 million and will join a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General.

Violet is our daily news reporter. Contact her at vcomberwilen@wfyi.org or follow her on Twitter at @ComberWilen.