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Community Health Systems to pay $75 million in Medicaid fraud whistleblower case

Suit claimed the hospital operator illegally donated money to New Mexico counties in return for higher Medicaid payments.

Photo from <a href="">New Mexico Hospital Association</a>.Photo from New Mexico Hospital Association.

Community Health Systems and three of its hospitals in New Mexico on Monday agreed to pay a $75 million settlement to the federal government over a whistleblower suit that claimed it illegally donated money between 2000 and 2011 to New Mexico counties in return for higher Medicaid payments to cover the costs of indigent care.

The 2009 suit claimed CHS and three of its New Mexico facilities -- Eastern New Mexico Medical Center, Mimbres Memorial Hospital and Alta Vista Regional Hospital -- received higher payments from the New Mexico Sole Community Provider Fund, a matching funds program between the state and Medicaid. The money in the fund was meant to help cover costs for unpaid medical bills.

The activity was uncovered by whistleblower Robert Baker, a former revenue manager at Community Health Systems Professional Services Corp. (CHSPSC).

"For every dollar a CHS hospital donated to the county, it received an amount equivalent to the 'donation' plus $3 back in supplemental Medicaid payments – making it a very lucrative investment for CHS and its hospitals,” said Peter W Chatfield, an attorney with Phillips & Cohen LLP, which filed the suit on behalf of Baker.

CHS denied that it did anything wrong, but agreed to the settlement, which resolves the claims against its CHSPSC subsidiary and two other hospitals, the Lea Regional Medical Center and Carlsbad Medical Center.

Baker and his lawyers will earn $18.67 million from the settlement under the federal False Claims Act, which encourages whistleblowers to uncover corporate fraud by giving them up to 25 percent of the recovered funds.

Publicly traded CHS manages more than 200 hospitals in 29 states.

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