DOJ alleges Indiana system offered ASC investments, higher pay in exchange for referrals

The Department of Justice joined a whistleblower lawsuit alleging that Indianapolis-based Community Health Network illegally paid physicians for referrals to its hospitals, ASCs and other facilities.

A lawsuit filed by CHN's former CFO, Thomas Fischer, alleges that the system paid physicians kickbacks for years in violation of the False Claims Act. Mr. Fischer also claims CHN engaged in retaliatory conduct. The lawsuit was unsealed Dec. 23, 2019.

Mr. Fischer is accusing CHN of paying physicians "substantial" kickbacks in the form of inflated salaries, bonuses and investment opportunities in exchange for referrals. Prosecutors plan to investigate the number of patients affected.

The DOJ partially joined the lawsuit in August 2019 on behalf of the federal government. It filed its own complaint in early January 2020, outlining an alleged scheme that amounted to tens of millions of dollars. The DOJ's allegations cite witness testimony.

"The government's intervention demonstrates how seriously it takes the allegations Tom Fischer raised," said Jay Holland, Mr. Fischer's lead counsel.

Mr. Fischer's counsel added that the incentives CHN allegedly provided to lock in referrals would lead physicians to order more medically unnecessary services and give the hospital little reason to compete for patients by offering low-cost, high-quality care.

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