Community Health Systems Professional Services Corporation and three affiliated New Mexico hospitals agreed to pay $75 million to settle allegations that they violated the False Claims Act, the DOJ said Monday.
The hospitals allegedly made illegal donations to county governments in New Mexico that were used to fund the state’s share of Medicaid payments to the hospitals.
The case started when a former Community Health revenue manager, Robert Baker, filed a whistleblower complaint under the qui tam provisions of the False Claims Act. The FCA allows private citizens to bring a lawsuit on behalf of the federal government and share in any recovery from defendants.
Baker will receive about $18.6 million as his share of the government’s recovery, the DOJ said.
Community Health is based in Franklin, Tennessee. It manages more than 200 affiliated hospitals in 29 states.
The three New Mexico hospitals involved in the settlement are Eastern New Mexico Medical Center in Chaves County, Mimbres Memorial Hospital and Nursing Home in Luna County, and Alta Vista Regional Medical Center in San Miguel County.
New Mexico’s Sole Community Provider (SCP) program, which was discontinued last year, provided supplemental Medicaid funds to hospitals in mostly rural communities, the DOJ said. The federal government reimbursed New Mexico for about 75 percent of its health care expenditures under the SCP program.
Under federal law, New Mexico’s 25 percent “matching” share of SCP program payments had to come from state or county funds, and not from “donations” from private hospitals. The federal restriction on the use of private funds to satisfy state Medicaid obligations was intended by Congress to give states an incentive to control Medicaid costs.
The DOJ alleged that from 2000 through 2010, Community Health Systems made private donations to the counties to cover the state’s obligation to pay 25 percent of the Medicaid obligations. The defendants thereby “knowingly caused the state of New Mexico to present false claims to the United States for payments,” the DOJ alleged.
The DOJ said the claims settled Monday with Community Health and its three affiliated hospitals in New Mexico “are allegations only and there has been no determination of liability.”
Since January 2009, the Justice Department has recovered a total of more than $23.5 billion through False Claims Act cases, with more than $15 billion of that amount recovered in cases involving fraud against federal health care programs.
The case is United States ex rel. Baker v. Community Health Systems Professional Services Corporation, et al., Civ. Action No. 05-279 (D. N.M.).
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.