Justice Department Accuses Indiana’s Community Health Network of Medicare Fraud

January 7, 2020 Updated: January 7, 2020

The Justice Department (DOJ) has filed a complaint against an integrated health care system based in Indiana, accusing them of making false claims to the Medicare program.

Community Health Network Inc. (Community) has been accused of violating the physician self-referral law. Commonly known as the Stark Law, it prohibits hospitals from billing Medicare for services referred by a doctor or an immediate family member with whom they have a financial relationship, except when a statutory or regulatory exception applies.

The complaint alleged that Community financial relationships with multiple doctors that did not meet Stark Law exceptions because the compensations Community paid to the doctors were “well above fair market value and because Community conditioned paying bonuses on physicians achieving a minimum target of referral revenues to the hospital.

Community would then submit claims to Medicare for services resulting from prohibited referrals from these doctors knowing that these claims were not eligible for payment, the complaint said.

“Improper financial relationships between hospitals and physicians corrupt clinical decision-making, threaten patient care, and ultimately drive up Medicare costs,” Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division said in a statement.

Community has disputed the claims, calling the allegations “meritless.” In a statement to media outlets, the health care system said that they were “disappointed with their decision” and “believe that it is a waste of the government’s time and resources to pursue these meritless claims.”

“This lawsuit involves certain administrative issues that are completely unrelated to patient care. We are confident that we have complied with the laws and regulations that govern the way we operate our health network. We are committed to fighting these allegations which have no merit,” the statement said.

“We are confident that we have complied with the law and regulations that govern the way we pay our physicians for the services they provide to our patients and to the communities we serve—services such as teaching, research, providing education to patients and developing protocols to enhance care delivery.”

Community added that in order to ensure compliance with physician compensation practices, they use a variety of resources such as independent third parties to evaluate the compensation to ensure that it is fair and complies with the law.

The government filed their complaint in a lawsuit under the qui tam or whistleblower provisions of the False Claims Act. That law allows the United States to intervene and take over the lawsuit, which was done in part in this case, the DOJ said.

The Stark Law was enacted in 1989 to address “overutilization of services, increased costs, and medical decision-making by physicians who stood to profit from referring patients to facilities or entities in which the physicians had a financial interest,” the complaint said.

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