Indiana-based Community Health Network has agreed to pay $345m to resolve allegations of illegal physician referrals and Medicare overbilling, spanning 2008 to 2020.

According to the US Department of Justice (DoJ), the health network hired hundreds of local physicians and overcompensated them in lieu of referring patients to its facilities.

These physicians, which included neurosurgeons, cardiovascular specialists, and breast surgeons, were offered as much as double of what they were getting in their private practices.

The DoJ also alleged that these physicians were given bonuses depending on their volume of referrals, with some of the referrals billed to Medicare.

This flouted the Stark Law, which bars physicians from making referrals for services payable by Medicare to an entity with which they have a financial relationship. 

To validate its illegal work, Community also appointed a valuation company to evaluate its compensation practices and offered the company false estimates to get a favourable stance, the DoJ further alleged.

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This settlement is said to be the largest False Claims Act settlement on Stark Law breaches.

US Attorney for the Southern District of Indiana Zachary A. Myers said: “Community Health Network overpaid its doctors. It also paid doctors bonuses based on the amount of extra money the hospital was able to bill Medicare through doctor referrals. Such compensation arrangements erode patient trust and incentivize unnecessary medical services that waste taxpayer dollars.” 

The hospital will now be under continuous government monitoring for the next five years.

In addition to the fine, the health network reached a five-year corporate integrity agreement with the US Department of Health and Human Services Office of Inspector General (HHS-OIG). 

The settlement comes over nine years after a former employee, Thomas Fischer, raised concerns and sued Community. Fischer had filed a complaint against the hospital system in 2014.

Fischer said: “I am grateful for this recovery. These claims are not mere technicalities; they directly affect patients, hospital employees and the high cost of healthcare.

“This puts money back into the healthcare system and is a victory for the Indiana taxpayer.”