UPDATE 1-Community Health to pay $89 mln to settle US billing probe

Mon Aug 4, 2014 6:19pm EDT

(Adds attorney comment)

Aug 4 (Reuters) - U.S. hospital operator Community Health Systems Inc said on Monday it has agreed to pay more than $89 million to settle a government investigation over billing practices at 119 of its facilities.

The U.S. Department of Justice since 2011 had been investigating whether Community hospitals charged government health plans, such at Medicare and Medicaid, for expensive short-stay admissions via emergency rooms that should have been billed as outpatient or observation cases. The probe covered the period from January 2005 to December 2010.

Under the terms of the settlement, Community agreed to pay $88.26 million to resolve the federal share of the claims and an additional $892,500 to states for their portion of Medicaid claims, the company said.

The settlement involves no finding of improper conduct by Community Health Systems or its affiliated hospitals, and the company has denied any wrongdoing, it said.

"CHS's conduct interfered with physician decision-making for the purpose of bolstering its bottom line at the expense of the American taxpayers," Matthew Organ of the law firm Goldberg Kohn said in an emailed statement. Organ represented Dr. Scott Plantz, one of the whistleblowers in the original civil lawsuit that led to the government investigation.

"The one and only factor that should influence a physician's decision to admit a patient to the hospital should be the patient's best interest, not the amount of money the hospital can earn," he added.

The Franklin, Tennessee-based company had previously set aside a $102 million reserve fund to cover the settlements and related legal costs.

Community said it agreed to enter a five-year corporate integrity agreement that will be incorporated into its existing compliance program.

The settlement does not cover government investigations into hospitals formerly affiliated with Health Management Associates that began before Community acquired HMA in January. (Reporting by Bill Berkrot; Editing by Leslie Adler)

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