Whistleblower Receives $18.6 Million Reward for Exposing Alleged Health Care Fraud Scheme

A whistleblower will receive an $18.6 million reward for filing a qui tam lawsuit that claims Community Health Systems Professional Services Corporation (CHSPSC) and three New Mexico hospitals made illegal donations to county governments in an effort to increase Medicaid payments. CHSPSC announced today that it has agreed to pay $75 million to settle the whistleblower lawsuit.

CHSPSC manages over 200 affiliated hospitals, including Alta Vista Regional Medical Center in San Miguel County, Mimbres Memorial Hospital and Nursing Home in Luna County, and Eastern New Mexico Medical Center in Chaves County.

CHSPSC and the aforementioned hospitals allegedly made the illegal donations to San Miguel, Chaves and Luna counties, which were then used by the counties and the state to obtain federal matching payments under New Mexico’s Sole Community Provider (SCP) program, which provided supplemental Medicaid funds to rural communities (the program was discontinued last year). In order to qualify for the federal matching funds, SCP program payments had to come directly from state or county funds; not from donations provided by hospitals.

According to the Justice Department, CHSPSC’s illegal donations caused New Mexico to submit false claims for payments made under the SPC program over the span of 10 years (between 2000 and 2010). CHSPSC hid the true intent of these donations in order to avoid detection, and as a result of the deception, received Medicaid payments amounting to three times that of their alleged donations.

Whistleblower Robert Baker, a former revenue manager with CHSPSC, filed suit against his former employer on the government’s behalf. The Justice Department decided to intervene in some of Baker’s allegations, though not all. Baker made similar allegations against two other CHSPSC-affiliated hospitals that the government decided not to pursue. Today’s settlement resolves all of Baker’s allegations.

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