FRESNO, Calif. — A Fresno-based healthcare organization will pay $32 million dollars to the federal government over allegations it committed fraud with its physicians.
Community Health System settled the case along with its affiliated medical group, Physician Network Advantage Inc., on Wednesday. The hospital operator owns four hospital facilities in Fresno County, including Community Regional Medical Center in downtown Fresno and Clovis Community Medical Center.
Physician Network Advantage is a healthcare technology company funded by Community Health System that provides the electronic medical records system used by its hospitals.
U.S. Attorneys allege the hospital system and technology company paid “extravagant” benefits, including bonuses, meals and technology discounts, to doctors who referred patients to their facilities.
For example, referring physicians allegedly had access to “a custom-built lounge located on premises at PNA’s offices,” according to the Department of Justice. The company then allegedly “provided expensive wine, liquor, cigars, and meals to referring physicians, with the knowledge and funding of Community [Health System.]”
Robb R. Breeden, Acting Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), said investigating these types of kickback arrangements is a top priority.
“This settlement demonstrates HHS-OIG’s commitment to identifying and holding accountable those who engage in unlawful financial relationships at the expense of Medicare patients and the taxpayer,” he said.
The case was brought to light by Michael Terpening, a Fresno accountant who received whistleblower protection under the False Claims Act. He will receive $5 million of the settlement.
The Federal Bureau of Investigation and the U.S. Postal Service Office of the Inspector General also took part in the investigation.
The settlement is not the first legal case to involve the Community Health System in recent years.
Last year, non-profit health groups Cultiva La Salud and Fresno Building Healthy Communities filed a lawsuit against the organization alleging the company was misspending billions of dollars meant for low-income patients in Fresno on extravagant upgrades to its Clovis facility.
That case has been paused until this summer while negotiations continue behind closed doors.
Oversight is a question in alleged acts
In a statement to KVPR, the Community Health Systems Board of Trustees Chair, Roger Sturdevant, said the company is confident about its investment into electronic records technology, but agreed with the conclusion of the settlement that it needed more oversight.
Sturdevant said that the company started investing in electronic health records in 2009. The effort was to streamline healthcare documentation and become more secure in providing services for their patients. But he wrote in a statement that they also should have implemented oversight measures to assure that physician referrals were compliant with the law.
“While we are confident that physician referrals were driven by Community Health System’s position as a leading provider of hospital-based and specialty services, we recognize that even the appearance of inappropriate incentives must be addressed,” Sturdevant wrote.
Sturdevant added the company is now addressing areas for improvement that ensure physicians and systems within the healthcare organization are compliant with U.S. laws and regulations.
The U.S. Attorney's Office for the Eastern District said Community Health System entered into a five-year “Corporate Integrity Agreement” designed to identify and address evolving compliance risks, according to the Attorney’s Office.
Despite the allegations of fraud, Sturdevant said he was confident the situation did not negatively affect patients.
“It is important to note, that at no time were patients inappropriately billed and this issue had no impact on our clinicians’ ability to provide outstanding care,” he wrote. “As the leading healthcare provider in our region, we want to assure the communities we serve that our commitment to continually improve our practices and to deliver quality healthcare services, remains unchanged.”
Editor’s Note: Community Health System is a corporate sponsor of KVPR.
