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UPDATE 1-Community Health Services unit to pay $75 mln in fraud settlement
February 2, 2015 / 7:32 PM / 3 years ago

UPDATE 1-Community Health Services unit to pay $75 mln in fraud settlement

(Adds comment from Community Health)

By Brendan Pierson

Feb 2 (Reuters) - A unit of Community Health Systems Inc , one of the largest U.S. hospital groups, and three of its hospitals have agreed to pay $75 million to settle claims that they made illegal donations to county governments in New Mexico to secure federal funding.

Whistleblower Robert Baker, former revenue manager for the Community Health unit, will receive $18.7 million of the settlement, subject to approval by the U.S. New Mexico federal court, the U.S. Department of Justice said on Monday.

Community Health on Monday denied the allegations.

The lawsuit, filed by Baker in 2005 and joined by the U.S. government in 2009, claims that the three hospitals made donations to three New Mexico counties in order to get federal matching funds from a program that provided extra Medicaid funding to rural hospitals.

Under the program, which was discontinued last year, the federal government provided $3 in matching funds for every dollar paid by the state. To encourage cost control, federal law required the state’s share to come from state or county funds, not hospital donations.

The hospitals 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.

Community Health, based in Franklin, Tennessee, manages more than 200 hospitals in 29 states. The subsidiary involved in the settlement is Community Health Systems Professional Services Corp.

The case is USA ex rel Baker v. Community Health Systems Inc et al, U.S. District Court, District of New Mexico, No. 1:05-cv-00279. (Reporting by Brendan Pierson; Editing by Ted Botha and Richard Chang)

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