What’s at stake?
The settlement resolves just one of the legal battles in which Community Health System, operator of Fresno’s downtown hospital as well as the Clovis Community Medical Center, is embroiled.
Community Health System and an affiliated health care technology business have reached a $31.5 million settlement with the U.S. Attorney’s Office, resolving allegations over kickback schemes.
The health care provider, which operates downtown Fresno’s Community Regional Medical Center as well as Clovis Community Medical Center, and its affiliate Physician Network Advantage will pay the bulk of the settlement amount to the U.S. government. A former PNA employee who filed a claim in connection with the case under whistleblower provisions will receive roughly $5 million as part of the settlement.
The settlement resolves allegations that PNA, a health care technology business founded in 2010 to support CHS’ expansion of electronic health records, wined and dined health care providers in exchange for the referral of patients who qualify for federal health care programs like Medicaid or Medicare to CHS for medical services.
In turn, CHS submitted claims to the federal government for that medical care.
“We cannot allow medical decisions to be distorted by kickback schemes,” said Acting U.S. Attorney Michele Beckwith in a news release, “or efforts to buy physicians’ loyalty with lucrative side perks.”
That wining and dining took place at a PNA-operated location at 7215 North First Street known as “HQ2,” according to court documents, where “expensive wine, liquor, cigars” and other items were kept on the premises.
CHS doesn’t admit to any wrongdoing under the terms of the settlement, nor does the government concede that its claims are unfounded.
In a statement, CHS’s Board Chair Roger Sturdevant said that while the health care system is “confident that physician referrals were driven by Community Health System’s position as a leading provider of hospital-based and specialty services,” it also recognizes that “even the appearance of inappropriate incentives must be addressed.”
Sturdevant added that CHS was embracing a 2009 federal directive to transition to health records by investing in “widespread implementation of electronic health records, including at primary care practices.”
“However,” he added, “it is clear we needed stronger oversight measures to assure that both Community and our vendor partner maintained appropriate compliance at all times.”
The settlement resolves additional allegations against the health care operator and the technology affiliate, including that CHS and PNA also sought patient referrals from physicians by offering financial subsidies for electronic health records technology and equipment for their private offices.
Additionally, the settlement resolves allegations that CHS paid bonuses to physicians, seemingly for participation in “clinical integration activities,” when the real purpose of the bonuses was to reward referrals, according to the settlement.
In an additional statement to Fresnoland, CHS spokesperson Mary Lisa Russell emphasized that the government’s allegations in this case concern “the way business was referred to us” and “not the actual service or billing.”
“All patients received appropriate and medically necessary services,” she said, “and all billing was accurate.”
This settlement is the end to just one legal battle the health care operator has faced in recent years.
In August 2024, two local nonprofits sued CHS, accusing it of siphoning $1 billion in public dollars intended to offset the costs of caring for the downtown hospital’s large share of low-income patients to instead fund lavish upgrades to the campus in affluent Clovis.
The case was filed in the wake of an August 2022 Fresno Bee investigation into funding disparities between the downtown and Clovis hospitals.
The parties in the lawsuit agreed in January to move talks out of court and behind closed doors to private negotiations, pausing litigation until June.
