Community Health Network Agrees To Pay More Than $20 Million Civil Penalty For Medicaid/Medicare Billing Fraud

Community Health Network ("CHN") agreed to repay a multi-million dollar sum to the federal government for Medicare and Medicaid billing fraud it committed over nearly a decade period between the late 1990s and 2009, but the question left unanswered by today's announcement by the U.S. Attorney's Office for the Southern District of Indiana is why the office is bringing no criminal charges against officials of CHN responsible for this not insignificant fraud on federal taxpayers.

According to a press released issued by the U.S. Attorney's Office, CHN contracted for free-standing ambulatory surgery centers ("ASCs") to perform outpatient surgery services for CHN patients. CHN would submit bills for Medicaid and Medicare reimbursement as if the surgeries were performed at a CHN facility instead of one of the ASCs which actually performed the outpatient surgery. CHN misrepresented the place of the surgery because CHN facilities generally received a higher rate of reimbursement for the same service performed at one of its ASCs. CHN continued this fraudulent practice for nearly two years after it had been put on notice that the Centers for Medicare and Medicaid Services ("CMS") required hospitals like CHN to bill at the ASC rate, not the hospital rate.

As part of the settlement, CHN agreed to repay the federal government $20,324,902.22 for submitting false claims to Medicare and Medicaid. Under the False Claims Act, the government can collect up to three times the amount of the loss occurred, plus a fine of up to $5,000 to $11,000 for each false bill submitted. It's not clear just how much CHN defrauded the federal government out of since billing records no longer existed for the entire period during which the fraud occurred. The U.S. Attorney's Office could have also brought criminal charges against the individuals responsible for the fraudulent billing but it did not. The settlement agreement didn't even require CHN to acknowledge guilt.

There seems to be a pattern of the U.S. Attorney's Office to treat individual health care providers differently than it does hospital administrators. The office has not hesitated to bring criminal charges against individual health care providers involving far less sums of money. Last year, the office brought criminal charges against an Indianapolis man, Ronald Reed, whose company overbilled Medicare and Medicaid for medical equipment, including wheel chairs, scooters and hospital beds. Reed's company sold used, refurbished equipment but billed it at rates applied to new equipment. He faced a prison sentence of up to 10 years for the charges brought against him for overbilling the government by a little more than $400,000. Similarly, a Fort Wayne woman, Kateen Morris, who operated a transportation company, faced criminal charges for overbilling Medicare and Medicaid. She was sentenced to one year in prison and ordered to repay the government nearly $400,000.

The U.S. Attorney's Office handled a case involving Gibson General Hospital the same way it handled CHN's case. Gibson General stood accused of overbilling Medicare and Medicaid in precisely the same manner that CHN overbilled the federal agencies, albeit for a much small sum. Gibson General was only asked to repay double what it overbilled taxpayers, which amounted to a total fine of about $1 million. Twenty percent of the money went to a government whistle blower, a former hospital employee, as a reward for reporting the false claims made by Gibson General. No criminal charges were brought in that case either. Why are hospitals treated differently than persons operating smaller, health care provider businesses. Are hospital administrators too big to jail?