INDIANAPOLIS (WISH) — The recent case against Community Health Network for violations of the Stark Law was initially brought about by a whistleblower within the health system.

Ultimately, Community will pay $345 million to the United States government due to violations of that law.

The Stark Law prohibits doctors from referring patients for services payable by Medicare or Medicaid where the physician or an immediate family member has financial ties. Services could include labs, physical therapy, drug prescriptions, and prosthetics, among other services.

Veronica Nannis is the lead counsel for the whistleblower, Thomas Fischer. She says this is illegal because it erodes the integrity of a doctor’s medical opinion.

“If there are financial incentives to send me for a treatment that I don’t need or send me for extra treatment or to send me to a location that they get a financial kickback if they send me to then there is no longer that independent medical judgment,” Nannis said.

This was uncovered by Fischer, a healthcare finance and operations executive, back in 2014. He initially filed the complaint with six claims alleging these violations go back to 2008. The U.S. Attorney’s Office for the Southern District of Indiana then took over two of the claims and settled with Community.

“The doctors were not named as defendants in this case and the government only filed against Community Health Network itself,” Nannis said.

The U.S. Attorney’s Office said Community paid some of its doctors well above fair market value, then awarded them bonuses tied to the number of their referrals. Community submitted claims to Medicare and Medicaid for services that resulted from these unlawful referrals.

“Today’s settlement resolves claims that community overpaid doctors to encourage them to illegally refer patients within their network, said Zachary Myers, the U.S. Attorney for the Southern District of Indiana. “The government also alleges the Community paid bonuses to many of its doctors based on illegal patient referrals to its own hospitals.”

“This was something that was much more widespread and systemic at community,” Nannis said. “This was not a one-off or a one contract or a one doctor.”

Community released a statement calling the violations technical and clarifying the $345 million settlement to the U.S. government will be paid out of reserves held by the healthcare network, which reported revenue of $3.1 billion last year.

The community release also said this settlement only resolves the claims made by the government but some claims made by a former employee remain pending.

The original whistleblower’s attorney confirmed her client and team and will continue the fight in the case of the four claims the government did not pursue against Community Health Network.

The full statement can be found below.

Community Health Network (Community), a leading not-for-profit Indiana healthcare provider, has resolved a legal dispute with the United States government.  

This matter involved alleged technical violations regarding the manner in which Community compensated certain employed physicians, dating as far back as 2008. The $345 million settlement will be paid from reserves held by the Network, which reported operating revenue of $3.1 billion in 2022. 

“This is completely unrelated to the quality and appropriateness of the care Community provided to patients,” said Community spokesperson Kris Kirschner. “This settlement, like those involving other health systems and hospitals, relates to the complex, highly regulated area of physician compensation. Community has consistently prioritized the highest regulatory and ethical standards in all our business processes.” 

The civil settlement resolves the government’s claims with no finding of wrongdoing. Community has always sought to compensate employed physicians based on evolving industry best practices with the advice of independent third parties. Community has always sought to provide complete and accurate information to our third-party consultants. 

“Community’s caregivers and our services will not be impacted by the settlement,” said Kirschner. “Community’s leadership has ensured the ongoing health and growth of the organization.” 

While the settlement resolves claims made by the government, certain claims made by a former employee which the government chose not to pursue remain pending. Community will continue to vigorously defend those claims. 

“Community has a bright future,” Kirschner added. “Our commitment to providing exceptional care is unwavering.” 

Kris Kirschner, Community Health Network spokesperson