Community Health Network, an Indianapolis-based hospital system, has reportedly reserved $75 million in anticipation of a potential settlement agreement with the U.S. Justice Department. The settlement stems from a whistleblower lawsuit filed nearly a decade ago by the hospital system's former chief financial officer.

In a recent financial filing, Community Health disclosed that it had added $50 million to its reserves related to the lawsuit, supplementing the $25 million it had previously set aside. The disclosure comes amid ongoing negotiations, with both parties recently informing a federal magistrate that they had reached an agreement in principle to settle much of the case.

The lawsuit, which has involved nearly 700 filings in federal court over the past nine years, centers around allegations that Community Health engaged in a scheme to recruit physicians by offering them substantial salaries and bonuses in exchange for patient referrals to the health system. The Justice Department’s complaint, filed under the False Claims Act in 2020, accuses Community Health of knowingly submitting false claims to Medicare from 2008 to at least 2017.

The whistleblower behind the case, Thomas Fischer, served as Community Health’s CFO from 2005 until his termination in 2013. Fischer alleges that he was fired in retaliation for raising concerns about the high salaries being paid to physicians during a period of financial strain for the health system.

As the case progresses, Community Health has requested a stay for 45 days to finalize the settlement terms, with a settlement conference scheduled for December 8. While both parties have acknowledged reaching an agreement in principle, additional negotiations are still required to resolve remaining issues.

Community Health has not commented on the status of the case or the $75 million reserve, stating only that the details are included in their financial reports. Fischer, the whistleblower, has also declined to comment on the ongoing litigation.

This case marks a significant chapter in Community Health Network's legal history, with the potential settlement bringing a close to a prolonged legal battle that has spanned nearly a decade. The outcome of the settlement could have important implications for how healthcare systems manage physician compensation and compliance with federal regulations in the future.

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