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Department of Justice joins and settles suits filed by Goldberg Kohn Ltd., O'Connell & Soifer LLP, and Kreindler and Associates

WASHINGTON, D.C.—August 4, 2014—Community Health Systems, Inc. has agreed to pay $97,257,000.00 to settle whistleblower lawsuits unsealed in federal courts across the country today. The United States Department of Justice joined the whistleblowers' lawsuits before announcing the settlement earlier today.

According to the whistleblowers’ complaints, CHS routinely admitted Medicare patients who presented at their hospitals’ emergency rooms with conditions that did not require admissions so that it could bill Medicare at higher inpatient rates, rather than less expensive outpatient rates. To drive these valuable inpatient admissions, CHS established benchmarks for the percentage of patients, particularly those over 65, who should be admitted from the emergency room, in a scheme intended to improve its profitability, and without regard to medical necessity or patient safety. CHS enforced those benchmarks by incentivizing and pressuring emergency department physicians and administrators to meet them. Physicians and administrators who failed to meet CHS's benchmarks were threatened with termination, and some in fact were fired.

Seven separate whistleblower lawsuits filed against CHS and some of its subsidiaries are being resolved in this settlement. The first four complaints were filed by employees working at different CHS hospitals in various capacities: a case management supervisor, a coding specialist, an emergency room physician, and a director of health information management. Each of them observed the same practices being directed from CHS's corporate offices, which practices they felt violated the federal and/or state False Claims Acts.

In addition to the emergency room admission claims that each of the first four whistleblowers identified, CHS also settled the separate claims of one of these whistleblowers, a coding specialist, who discovered additional issues at CHS’s Laredo Medical Center, including routine outpatient procedures being billed at inflated rates to Medicare as inpatient procedures and a kickback scheme to reward doctors for admissions in violation of the Anti‐Kickback Statute.

These diverse whistleblowers brought their claims against CHS under the False Claims Acts, which encourages private citizens to report fraud against the government by allowing them to sue on behalf of the government and receive a share of any recovery. The False Claims Act also allows the government to join and prosecute such lawsuits, as the Department of Justice did in this case. DOJ joined the whistleblowers in pursuing those allegations through a multi‐year, nationwide investigation resulting in today's settlement. In early 2011, at the request of the Department, the first four whistleblowers and their counsel joined together as a team to coordinate their efforts to assist the DOJ with its investigation. "These cases provide the perfect example of the effectiveness of the False Claims Act when whistleblowers and their attorneys work cooperatively together with the government to prosecute a massive, nationwide scheme," said Patrick O'Connell of O'Connell & Soifer. These four whistleblowers and their combined legal team provided extensive support – in excess of thirteen thousand hours over five years – to the government’s efforts.

CHS is one of the largest for‐profit hospital chains in the nation, with 208 hospitals in 29 states. CHS's practices were brought to the government's attention by whistleblower lawsuits filed by O'Connell & Soifer LLP, Goldberg Kohn Ltd., and Kreindler and Associates on behalf of their clients. O’Connell & Soifer LLP’s team on these successful matters included consultants John Schilling and Sal Barbera of EthicSolutions LLC. The government investigation was led by Department of Justice Trial Attorney Melissa Handrigan; Assistant United States Attorney for the Middle District of Tennessee, J.D. Thomas; and Assistant United States Attorney for the Southern District of Texas, Andrew Bobb. "The government team orchestrated a sophisticated and successful investigation," said Jan Soifer of O'Connell & Soifer. "We are grateful for their excellent work and pleased to have had the opportunity to work closely with this terrific team of government lawyers to help advance these cases."

Mitch Kreindler, of Kreindler & Associates, commended the whistleblowers: "We are proud of our clients for having the courage to come forward and expose CHS's practices and the conviction to stand by the truth and see the cases through to their conclusion."