Second Record-Breaking Settlement Paid by Community Health Network in one Year; Third False Claims Act Settlement for Hospital Network in Last Ten Years
January 2, 2025 GREENBELT – Indiana-based Community Health Network (Community) settled the second half of a healthcare fraud case for $135 million. This settlement is the culmination of the False Claims Act (FCA) case brought by whistleblower and former Community Chief Operating Officer and Chief Financial Officer Thomas P. Fischer on behalf of the United States and State of Indiana more than ten years ago.
This settlement would have represented the largest settlement in a case of its type (by $20 million) but for the fact that the United States and Community settled the first part of Mr. Fischer’s case for $345 million last December. Taken together with its $20.3 million settlement with DOJ in 2015, Community has now paid more than half a billion dollars in three False Claims Act settlements in the last decade.
The settlement comes after Mr. Fischer sued his former employer, Community. Fischer is a whistleblower, or “relator” under the FCA, who filed suit on behalf of the governments based on detailed insider knowledge of fraud. Along with the settlement of the governments’ claims, Mr. Fischer and Community also resolved his employment-related claims.
This settlement resolves allegations that Community overpaid employed physicians (both physicians directly employed by Community and an independent oncology group – Community Hospital Oncology Providers – who contracted exclusively with Community). The suit alleged that the excessive payments to physicians were paid to ensure that they sent their patients to Community facilities – in violation of federal and state laws, including the Stark Law — which prohibit payments of any kind, including inflated salaries, to physicians to influence where they treat or refer patients.
This settlement also includes allegations that Community paid above-fair market value rent to a physician-owned real estate partnership to induce the physician owners to refer patients to a Community owned ambulatory surgical center in violation of the Anti-kickback Statute. While the settlement last December was for claims prosecuted by the United States, these newly-settled claims were for those prosecuted by Mr. Fischer on behalf of the governments after they declined to intervene.
Describing the combination of intervened and non-intervened claims, Mr. Fischer’s counsel Veronica Nannis of Joseph Greenwald and Laake commented, “This historic settlement is a testament to the public-private partnership unique to the FCA. It shows the genius of the FCA – allowing the government to focus on some of the claims, while the relator takes the laboring oar on the other claims. This is often the best way to ensure maximum recovery for the taxpayer.”
JGL Partner Jay Holland echoed the sentiment, “This record settlement demonstrates the important contribution whistleblowers can make even when the government declines a case. As lead counsel on this contentious litigation, we are so proud of the exemplary work of our JGL team, including our colleagues Steven Pavsner and Virginia Grimm. At our side, our co-counsel firms formed a formidable team that was able to prosecute a vigorously defended case by large, national law firms.”
JGL Partner Steve Pavsner, who deposed Community’s outside counsel, in-house counsel, principal executives, outside consultant, and board members, added: “Hopefully, this litigation will serve as a warning to others that the Medicare and Medicaid reimbursement rules need to be followed.”
Fischer reflected, “This has been a long journey – more than ten years and thousands of hours of work – and I couldn’t have done it without the unwavering support of my wife, Gayle.”
Mr. Fischer stated that his efforts were intended to hold the Community executives and its board of directors accountable for their actions. Further, he complimented the thousands of hard-working and honest Community employees who have dedicated their lives to patient care.
Fischer continued, “I am profoundly grateful for the diligence, persistence and skill of the great government teams (both the US and Indiana) that worked on this case – especially lead DOJ attorney Arthur DiDio – and the incredible efforts of my legal team who represented me throughout.”
Fischer hopes this settlement will encourage other whistleblowers. “I hope these settlements will help empower and inspire others working in healthcare organizations across the country to speak up and speak out if and when they see potential fraud – both internally within their organizations and, if internal whistleblowing doesn’t work, to report to the government.”
“These claims are not mere technicalities; they directly affect patients, hospital employees and the high cost of healthcare. This settlement puts money back into the healthcare system and is a victory for Indiana and federal taxpayers,” Fischer said.
Fischer’s Indianapolis attorney Kathleen DeLaney added, “We are pleased to have reached a global settlement with Community which also resolves Mr. Fischer’s individual retaliation and employment-based legal claims ten years after his wrongful termination.”
For DeLaney and Fischer’s other counsel, Tim McCormack, this has been a 10-plus year journey.
“I could not be prouder of Mr. Fischer’s tenacity,” said McCormack. “Cases like this are vital to keeping financial incentives away from medical judgment. Without a brave insider like Mr. Fischer, willing to speak up and then blow the whistle, Community likely would have gotten away with alleged fraud.”
Mr. McCormack continued: “After three False Claims Act settlements worth more than half a billion dollars in the last ten years, it will be interesting to see what steps Community takes to reform its physician compensation and billing practices. With this case, both DOJ and the Indiana Attorney General’s Office have demonstrated their tenacious commitment to fighting suspected healthcare fraud.”
The case is U.S. and State of Indiana ex rel Fischer v. Community Health Network, Inc., et al., Case No. 1:14-cv-1215-RLY-MKK. Fischer is represented by lead counsel Veronica Nannis, Jay Holland, Steven Pavsner and Virginia Grimm, Joseph, Greenwald & Laake; Timothy McCormack, Michael Smith, Elizabeth Quinby, and Michael Hanify, Preti Flaherty Beliveau & Pachios, LLP; Bruce Greenberg and Anthony Zatkos, Lite DePalma; and local and employment counsel Kathleen DeLaney and Anna Conklin, DeLaney & DeLaney LLC. The government’s team was led by Arthur DiDio of the DOJ, United States Attorney for the Southern District of Indiana Zachary A. Myers and Civil Chief for the U.S. Attorney’s Office, Southern District of Indiana, Shelese Woods; Indiana Attorney General Todd Rokita; Director of the Indiana Medicaid Fraud Control Unit Matthew Whitmire, and Deputy Attorney General Lawrence Carcare.
