Consumer Fraud

Whistleblower lawsuit leads to $75 million settlement with three New Mexico hospitals and parent company

whistleblower 2 370x210 Whistleblower lawsuit leads to $75 million settlement with three New Mexico hospitals and parent companyTennessee-based Community Health Systems Professional Services Corporation and three affiliated New Mexico hospitals have agreed to settle a whistleblower lawsuit for $75 million, resolving allegations that they violated the False Claims Act by making illegal donations to county governments to boost federal payments received under a matching Medicaid funds program.

“Congress expressly intended that states and counties use their own money when seeking federal matching funds in order to encourage them to join the federal government in ensuring that Medicaid funds are spent on the needs of beneficiaries,” said Joyce R. Branda, Acting Assistant Attorney General for the Justice Department’s Civil Division. “When private hospitals violate the rules against hospital donations funding the state share, that important protection of the Medicaid program is destroyed.”

Under New Mexico’s Sole Community Provider (SCP) program, which was discontinued last year, the federal government reimbursed the state for approximately 75 percent of its health care expenditures. Under federal law, the remaining 25 percent, funded by the matching share, had to be covered by state or county funds, not by illegal donations from private hospitals.

Congress enacted the restriction on the use of private hospital funds to satisfy state Medicaid obligations in an effort to keep Medicaid abuse in check and ensure that states have sufficient incentive to curb rising Medicaid costs. The SCP fund also helps hospitals recover the costs of providing care to indigent patients who are unable to pay their medical bills.

According to the whistleblower lawsuit, which the U.S. joined in 2009, Community Health Systems made improper donations to Chaves, Luna and San Miguel counties in New Mexico, which they, and subsequently the state, used to obtain federal matching payments under the SCP program. Under this arrangement, Community Health Systems knowingly caused the state of New Mexico to submit false claims to the federal government. The alleged activity occurred for a little more than a decade starting in 2000 and ending in 2010.

The three hospitals implicated in the scheme are Eastern New Mexico Medical Center in Roswell (Chaves County): Mimbres Memorial Hospital in Deming (Luna County); and Alta Vista Regional Hospital, in Las Vegas (San Miguel County).

Robert Baker, a former revenue manager at Community Health Systems, filed the whistleblower complaint under the qui tam provisions of the False Claims Act, which permit individuals to sue on behalf of the government and share a percent of any recovery made as a result of the legal action. Mr. Baker will receive more than $18,671,000 as his share of the government’s recovery.

Source: U.S. Department of Justice