Core Summary

  • Community Health Network will pay former Chief Financial Officer and Chief Operating Officer Thomas Fischer $6.3 million in an "employment-related settlement," part of a $145.7 million settlement agreement involving allegations of violating the federal False Claims Act, according to the company's financial report. The latest settlement involves remaining claims in a whistleblower lawsuit filed in 2014 by the former finance executive under the "qui tam" provision of the False Claims Act, which allows individuals to sue on behalf of the government and share in recovered funds.
  • The $145.7 million settlement (including fines and interest) comes after the Indianapolis, Indiana-based nonprofit healthcare provider agreed in December 2023 to pay the U.S. government$345 millionfollowing a Department of Justice investigation triggered by Fischer's whistleblower complaint, which alleged that CHN "knowingly submitted claims to Medicare for services referred in violation of the Stark Law," according to a press release at the time.
  • According to a statement CHN sent to CFO Dive, the payment to the former CFO involves remaining claims raised by the whistleblower that the government chose not to pursue. "In December 2023, Community Health Network resolved a 10-year legal matter with the federal government," the company said. "At that time, certain claims raised by a former employee (which the government chose not to pursue) remained pending. We have now resolved all remaining claims without any finding of wrongdoing."

Dive Brief

According to the government's complaint, Fischer served as CFO of the Indianapolis-based healthcare company starting in October 2005 and was appointed CFO and COO in December 2012. He was terminated in November 2013.

The company said in its December 30 filing that Fischer will receive the $6.3 million payment sometime this month. "The whistleblower's attorney fees are still being negotiated, but $14 million has been accrued in the consolidated balance sheet as of September 30, 2024," the company said.

The healthcare provider denies wrongdoing and noted that "although the Network believed the allegations raised by the whistleblower were without merit, to avoid the expense and risk of continued litigation, the Network entered into settlement negotiations with the whistleblower, the Department of Justice, and the State of Indiana in September 2024, which were completed in December 2024." The company added: "Additionally, the Network entered into settlement negotiations with the whistleblower regarding employment-related claims, which the Network believed were without merit, but chose to avoid the expense of continued litigation."

CHN said in its financial report that the settlement contributed to a 5.9% year-over-year increase in operating expenses. For the nine months ending September 2024, CHN reported an operating loss of $108.5 million, compared to an operating profit of $12.6 million in the same period last year.

This final settlement follows CHN's resolution with the DOJ and the State of Indiana, which intervened in Fischer's 2014 whistleblower complaint in 2019. The DOJ's complaint alleged that starting in 2008, senior CHN officials "began an illegal scheme to recruit physicians to employment in order to obtain their lucrative 'downstream referrals.'"

The DOJ said such actions violated the Stark Law, which is designed to "protect the integrity of the Medicare program." The law prohibits hospitals from billing for certain services referred by physicians with whom they have financial relationships.

"In addition to paying excessive compensation to specialist physicians, the complaint also alleges that Community paid incentive compensation to physicians in the form of financial performance bonuses based on physicians meeting referral targets to the Community network, which also violated the Stark Law," the DOJ complaint said.

The agreement between the company and its former CFO comes amid heightened tensions in the healthcare industry following the fatal shooting of UnitedHealthcare CEO Brian Thompson in early December. According to Healthcare Dive, a sister publication of Industry Dive, the shooting hasprompted healthcare companiesto enhance executive security measures, including precautions such as removing senior leadership biographies from websites.

The shooting also drew attention to the inner workings of health insurers, including billing and premium practices. Meanwhile, many are contemplating the fate of healthcare programs such as Medicare and Medicaid under President-elect Donald Trump, who has promised to cutfederal spending on such programs, Healthcare Dive previously reported.