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Department of Justice claims Community Health Network fraudulently billed Medicare

CHN allegedly received referrals from physicians in violation of the Stark Law and submitted Medicare claims knowing they were ineligible.

Jeff Lagasse, Associate Editor

The U.S. Department of Justice is alleging that Indianapolis-based Community Health Network knowingly billed Medicare for services referred by a doctor with financial ties to the health system -- which the government said has entailed millions of dollars over the course of nearly a decade.

In a complaint filed this week, the DOJ alleged that CHN had employment relationships with a number of physicians that did not meet any Stark Law exception because the compensation it paid to the physicians was well above fair market value -- and because CHN conditioned paying bonuses on physicians achieving a minimum target of referral revenues to the hospital. 

The complaint also alleges that CHN received referrals from these physicians in violation of the Stark Law and submitted claims to Medicare knowing that the claims for those referred services were not eligible for payment.

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In filing the complaint, the DOJ joins an active whistleblower lawsuit, with the whistleblower claiming that fraudulent claims submitted by the provider likely numbered in the tens of thousands from 2008 to 2017, which would also be in violation of the False Claims Act.


The Stark Law prohibits a hospital from billing Medicare for services referred by a physician with whom the hospital has an improper financial relationship that does not meet any statutory or regulatory exception.

The DOJ filed its complaint in a lawsuit originally filed under the whistleblower provisions of the False Claims Act, which allow private parties to file suit on behalf of the U.S. for false claims and to receive a share of any recovery.  The Act permits the government to intervene and take over the lawsuit, as it has done here in part.

The case is being handled by the Justice Department's Civil Division and the U.S. Attorney's Office for the Southern District of Indiana, with assistance from the Office of Inspector General of the Department of Health and Human Services.


The Stark Law has what is referred to as "safe harbors" or "exceptions." These protect certain arrangements that might otherwise violate the laws. Because of the nature of the Stark Law, all of an exception's requirements must be met, or else the law has been violated.

An example: An entity can enter into a bona fide employment arrangement with a physician in which the entity pays compensation to the physician if the amount of the compensation is consistent with fair market value -- not determined in a way that takes into account the volume or value of any referrals by the physician to said entity.

If the compensation isn't at fair market value, the Stark Law is violated, regardless of the reason for exceeding the fair market value compensation level.

Twitter: @JELagasse

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