UPDATE: Feb. 23, 2023: A spokesperson for Community Health Systems said on Friday that the company “is familiar with the facts and circumstances” surrounding January’s Civil Investigative Demand and has previously investigated the concerns to “satisfaction.” CHS believes the CID stems from allegations by a former hospital employee.
Dive Brief:
- Community Health Systems is being investigated by the Department of Justice, according to a Wednesday filing with the Securities and Exchange Commission.
- CHS received a Civil Investigative Demand on Jan. 11 for materials related to utilization review, inpatient admissions and inpatient dialysis, according to its 10-K filing.
- The Franklin, Tennessee-based for-profit operator said in its filing that it’s “cooperating fully” with the investigation.
Dive Insight:
CIDs, or formal requests for records and information, can be a pre-litigation discovery tool that precedes federal False Claims Act investigations, according to a 2019 report from Bloomberg Law.
The federal government has targeted CHS before, using CIDs to launch False Claim Act investigations. The DOJ accused CHS and its affiliates of violating the FCA in 2018. The agency determined that Health Management Associates, a subsidiary of CHS, had defrauded Medicare, Medicaid and TRICARE between 2008 and 2012.
CHS acquired HMA in 2014, and at the time was aware of what were then alleged fraudulent practices, according to the DOJ. HMA paid a $262 million settlement in 2018.
In 2021, a U.S. district court ordered the unsealing of a qui tam complaint — or allegations from individuals with knowledge of false health claims being submitted to the government — related to allegations that CHS' former hospital in St. Petersburg, Florida, and other unaffiliated facilities violated the FCA.
However, the U.S. declined to intervene in the case, and CHS has reached a tentative settlement, subject to approval from the DOJ, according to the 10-K. That investigation was sparked by a CID, according to the 10-K.
The healthcare industry is a leading source of FCA settlements for the DOJ. In fiscal year 2023, over $1.8 billion of the DOJ’s $2.7 billion in FCA settlements and judgments came from the healthcare industry. The DOJ logged multi-million dollar settlements with providers including Tenet Healthcare in June and payers, including Cigna in October.
A spokesperson from the DOJ declined to comment on the CHS investigation.
Editor’s note: This article has been updated to add a statement from CHS.
