(Updates with comment from company)
DOW JONES NEWSWIRES
The U.S. joined a whistleblower suit against Community Health
Systems Inc. (CYH) and three of its hospitals in New Mexico
regarding Medicaid billing practices.
The suit accused the company and Eastern New Mexico Medical
Center in Roswell, Mimbres Memorial Hospital in Deming and Alta
Vista Regional Hospital in Las Vegas, N.M., of fraudulently taking
more than $47.5 million from a Medicaid program that helps states
make supplemental payments for indigent health care.
Company spokeswoman Tomi Galin said the suit comes three years
after the government launched an investigation. She noted that the
company cooperated with that probe and "is disappointed in the
government's decision to pursue litigation."
"The company views this issue as a funding dispute between
government agencies. The government has never alleged that the
hospitals filed false claims or that they received reimbursement
under the Sole Community Provider program for services the
hospitals did not provide," Galin said.
The suit was filed under the qui tam provisions of the federal
False Claims Act by Robert Baker, a former revenue manager in
Community Health's corporate office.
Under the law, a private person can sue on behalf of the U.S.
and receive a portion of the money recovered. The U.S. may recover
three times the amount of its losses plus civil penalties,
according to the False Claims Act.
Baker's complaint alleges Community Health and the three
hospitals improperly obtained federal funds through two Medicaid
programs starting in the summer of 2000. In one program, the
federal government "matches" funds that state or local governments
agree to invest in discretionary Medicaid payments that provide
extra money to hospitals that treat a "disproportionate share" of
low-income patients.
Community Health and the hospitals were accused of donating
money to New Mexico counties that they knew would be used by the
counties and state to claim and obtain triple the amount in federal
funds that then were paid to the hospitals under the Medicaid
programs.
Baker alleges the donation arrangement violated the Medicaid
law's prohibition of federal funding when the state or county has
received donations from health-care providers related to the amount
of Medicaid reimbursement paid to the provider.
Community Health's shares were at $13.42, down 3.8%, in
after-hours trading.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com