FOR IMMEDIATE RELEASE

CIV

TUESDAY, MAY 9, 2000

(202)514-2007

WWW.USDOJ.GOV

TDD (202) 514-1888

TENNESSEE-BASED HOSPITAL CHAIN PAYS

$31 MILLION TO SETTLE ALLEGATIONS OF OVERCHARGING FEDERAL HEALTH PROGRAMS

WASHINGTON, D.C. -- Community Health Systems (CHS) has agreed to pay $31 million to resolve allegations that it submitted false claims for reimbursement to Medicare, Medicaid, and TRICARE, the Defense Department's health care program, the Justice Department announced today.

The settlement with the Brentwood, Tennessee-based hospital chain followed allegations of "upcoding" - the improper assignment of diagnostic codes to hospital inpatient discharges for the purpose of increasing reimbursement amounts. The overcharges stemmed from misuse of eight different codes, including those for pneumonia, septicemia, certain cardiac conditions, and respiratory failure and ventilators between January 1, 1994 and December 31, 1997.

After being notified of pending investigations of several of its hospitals, CHS disclosed the chain-wide upcoding to the government. As part of the settlement, the company agreed to assist the government in the investigation or prosecution of related cases.

"This settlement demonstrates the United States' commitment to protecting federal funds from fraud and abuse," said David W. Ogden, Acting Assistant Attorney General in charge of the Civil Division. "The Medicare system operates on the good faith and honesty of its providers, and we cannot tolerate misuse of the reimbursement system for financial gain."

Community Health Systems also has entered into a corporate compliance agreement with the Department of Health and Human Services that is designed to ensure that accurate claims are submitted to government health care programs with respect to inpatient treatment.

"This case is a good example of the value of compliance programs and provider self-disclosure," Department of Health and Human Services' Inspector General June Brown Gibbs said. "Through its voluntary compliance program, Community Health Systems identified a Medicare billing abuse and then self-disclosed the problem to the government. Because of the self-disclosure, we have significantly modified the company's obligations under the corporate compliance agreement that is part of the settlement."

The states of Illinois, New Mexico, South Carolina, Tennessee, Texas and West Virginia will also receive a part of the settlement for losses caused to their Medicaid programs by CHS' upcoding practices.

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