Relevant Documents:ComplaintDOJ Notice
On behalf of the United States, whistleblowers Derek Lewis and Joey Neiman are seeking to recover damages and civil penalties from Community Health Systems and Medhost due to the companies’ alleged submission of “hundreds of millions of dollars in false claims” to the Department of Health and Human Services, or HHS, for federal incentive payments. The complaint, filed Jan. 31, 2018, but unsealed Thursday by Judge Robert Scola Jr., alleges that Community Health and Medhost fraudulently obtained “hundreds of millions of dollars in incentive payments” under the Medicare and Medicaid “Meaningful Use Program,” which provides incentive payments to healthcare providers who have demonstrated a “meaningful use” of their electronic health records, or EHR.
Starting in 2012, according to the complaint, Community Health represented to the U.S. government that “dozens of its hospitals met the objectives and measures” for the meaningful use of certified EHR technology. Despite the company’s position, the complaint says that the EHR technologies implemented by CHS “contained serious flaws that endangered patients and made its hospitals ineligible for incentive payments under the Meaningful Use program.”
The complaint states that as a result of those allegedly fraudulent representations, the company received $450 million in meaningful use incentive payments between 2012 and 2015.
Lewis and Neiman request a trial by jury; that the defendants “cease and desist from violating 31 U.S.C. § 3729 et seq.”; that the court enter judgment against defendants
“in an amount equal to three times the amount of damages the United States has sustained because of Defendants' actions, plus a civil penalty for each violation of 31 U.S.C. § 3729”; and that the relators be awarded “the maximum amount allowed pursuant to § 3730(d) of the False Claims Act” along with all costs of the lawsuit, including attorneys fees and expenses (emphasis added).
The plaintiff-relators are former employees of Community Health who left the company in December 2016 after working for several years on the company’s EHR systems. They seek to recover “all available damages, civil penalties, and other relief for the [False Claims Act] violations alleged herein in every jurisdiction to which Defendants' misconduct has extended.” The defendants’ false and fraudulent statements violate the False Claims Act, which “allows any person [as plaintiff-relator] having information about an FCA violation [] to bring an action on behalf of the Government, and to share in any recovery,” argues the complaint.
The complaint reviews that an FCA complaint is required to be under seal for a minimum of 60 days in order to allow the government to conduct its own investigation “and to determine whether to join the suit.” In a notice filed with the court on Tuesday,
the United States said it would not be intervening “at this time,” but added its investigation is continuing (emphasis added). The notice indicates that the court extended the government's original deadline to join the suit but would not grant further extensions past March 12. The U.S. requested that the court unseal the complaint and the government’s notice, and solicit the United States for written consent before dismissing, settling or otherwise discontinuing the action. The government asked that it be served with all pleadings in the case.
Lewis, who joined Community Health in 2009, served in several roles dealing with EHR matters between 2012 and December 2016. His final role was director of technology adoption and deployment, “where he was responsible for managing EHR implementation projects at CHS hospitals.” Neiman worked for the company from 2012 to December 2016, most recently as manager of health information system delivery and deployment services. In that role, Neiman “was responsible for building EHR systems as part of hospital conversions and acquisitions, as well as program management for various projects involving CHS's EHR software.”
Much of the company’s capital structure traded down today, including an estimated $159.3 million in volume of the company’s
recently issued $1.6 billion of 8% notes due 2026, according to TRACE. The notes closed today at 94.5, compared with a March 13 closing price of 97.125 and an issue price of 98.683 on Feb. 28.
Allegations
Medhost, which developed the EHR technology implemented at many Community Health hospitals, failed to “perform critical functions safely and reliably,” and the providers who relied on Medhost software “often viewed it as an impediment to care, rather than an improvement,” alleges the complaint. “[P]ervasive flaws” with the Medhost software include “multiple design failures in its software for computerized physician order entry [] and clinical decision support.” “Many of the flaws create an acute risk to patient health and safety,” the complaint alleges. Medhost's software would not have been eligible for incentives certification “if the certifying body had known that Medhost could not perform many of the critical functions it falsely represented it could perform,” the plaintiff-relators argue. Similarly, 60 Community Health hospitals using a modular EHR software called PULSE, “failed to integrate the different PULSE EHR modules, forcing providers to print clinical information when patients transitioned from one care setting to another, as well as when doctors entered medication orders.” Community Health acquired those hospitals through a merger with Health Management Associates, and the lack of proper integration of PULSE EHR modules resulted in hospital staff needing to “print out [a] patient’s medical records for delivery to a new department.”
The complaint says that workflows have resultantly “required nurses to enter the same patient information into the EHR multiple times, with the risk of patient harm increasing with each unnecessary step.”
According to the plaintiff-relators, Community Health knowingly misrepresented that the PULSE and Medhost EHRs were eligible for meaningful use incentive payments.
As one of the “largest hospital operators in the nation,” with 127 hospital facilities in 20 states, incentive payments from the government were “an important revenue stream for CHS which received $544 million in incentive payments” under the Health Information Technology for Economic and Clinical Health Act (which established the meaningful use program). The complaint alleges that with “large amounts of money at stake,” Community Health “made it a business priority for as many of its hospitals as possible to submit attestations for Meaningful Use incentive payments.” Medhost’s software was implemented at “a rapid pace” for the purpose of submitting attestations for meaningful use incentive payments, alleges the complaint. The plaintiff-relators argue that, accordingly, the company took “shortcuts” leading to additional defects with performance.
The plaintiff-relators, as an example, allege that Community Health “mapped many order sets incorrectly to hospital formularies,” which caused doctors to place orders for incorrect medications and medication dosages.
The complaint states that a Community Health employee warned that those flaws had "a very high potential for causing a catastrophic event” (emphasis added).
Due to the defendants' acts, the complaint alleges, the United States “has been damaged, and continues to be damaged, in a substantial amount to be determined at trial.” The government, the plaintiff-relators conclude, “is entitled to the maximum penalty for each and every violation arising from Defendants' unlawful conduct alleged herein.”