One of the largest publicly-traded hospital companies in the country will pay more than $98 million to settle a Department of Justice investigation into “medically unnecessary” inpatient admissions of Medicare and Medicaid patients into emergency departments.

Community Health Systems, headquartered in Franklin, Tenn., owns, leases or operates 206 affiliated hospitals in 29 states, including Red Bud Regional Hospital in this area.

Legal action was filed under the False Claims Act in Illinois and other states across the country. Marion law firm Ronald E. Osman & Associates represented the plaintiff in a U.S. District Court of Southern Illinois filing against CHS and its subsidiaries.

Illinois hospitals named as participants in the alleged fraud scheme include Heartland Regional Medical Center in Marion, Union County

Hospital in Anna, Crossroads Community Hospital in Mt. Vernon, Gateway Regional Medical Center in Granite City, Vista Medical
Center East in Waukegan, and Red Bud Regional Hospital. The time period in which fraudulent claims were submitted is between January 2005 and December 2010.

The Southern Illinois legal filing alleges medically unnecessary admissions of Medicare and Medicaid beneficiaries through hospital emergency rooms at CHS hospitals; corporate policies issued by CHS to its hospitals requiring all Medicare and Medicaid beneficiaries presenting at the emergency room for treatment be admitted as inpatients regardless of whether such admissions were reasonable or necessary; daily admission quotas placed on hospitals by CHS for the admissions of Medicare and Medicaid patients through the emergency room; and medically unnecessary inpatient hospital services resulting from these admissions.

About $88 million of the settlement will go to resolve claims made by the federal government that during that five-year period, 119 of the company’s hospitals billed the government for inpatient admissions when, in the government’s view, those services should have been billed as outpatient cases.

CHS will also pay $892,500 to compensate the states for their portion of the Medicaid claims. The remaining $9 million of the settlement will be allocated to settle a separate investigation of alleged False Claims Act and Stark Law violations at a facility in Laredo, Texas.

“As a result of the reporting of the fraudulent claim, monies have been returned to the Medicare and Medicaid funds, and a clear and important message has been sent to the healthcare industry that healthcare fraud will not be tolerated in the United States of America,” Osman & Associates issued in its statement.

A spokesman for Red Bud Regional Hospital referred the Republic-Times to a CHS corporate spokesperson, who supplied its national news release on the matter.

“The settlement agreement reflects the company’s desire to end the investigation, which began in 2011, and to avoid the significant expense and distraction of litigation,” the CHS release states. Despite the settlement, CHS denies any wrongdoing.
“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,” CHS Chairman and Chief Executive Officer Wayne T. Smith stated in the release.

“Unfortunately, shifting and often ambiguous standards make it extremely difficult for physicians and hospitals to consistently comply with the regulations.” In anticipation of these settlements, CHS had set aside $102 million to cover the costs. The settlement agreement also stipulates that CHS take part in a five-year Corporate Integrity Agreement.