FRANKLIN, Tenn.--(BUSINESS WIRE)--Sep. 25, 2018--
Community Health Systems, Inc. (NYSE: CYH) (“the Company”) announced
today that it has reached a global resolution and settlement agreements
ending the U.S. Department of Justice investigation into conduct by
Health Management Associates, Inc. (“HMA”) and its affiliated entities
reflected in qui tam lawsuits that were initiated and pending,
and known to the Company, before HMA was acquired by merger in January
The settlement concludes the government’s investigations into whether
HMA and its affiliated hospitals billed Medicare, Medicaid and TRICARE
for certain inpatient admissions following emergency room visits between
January 2008 and December 2012 that should have been billed as
outpatient or observation cases. The settlement also resolves
allegations of Stark and Anti-Kickback Act violations at certain HMA
In reaching the settlement, the government noted that all conduct
reviewed in its investigation pre-dated the HMA acquisition, and that
following the acquisition, Community Health Systems engaged in remedial
measures, including removing the HMA Board of Directors and senior
executives and integrating the HMA affiliated hospitals into Community
Health System’s existing compliance program.
The settlement includes a Non-Prosecution Agreement with HMA in which
the government agreed not to bring criminal charges against HMA, as long
as HMA and the Company abide by the provisions of the global settlement,
and also includes a guilty plea to one count of conspiracy to commit
healthcare fraud by Carlisle HMA, LLC (“Carlisle HMA”), the HMA
affiliated entity that formerly operated Carlisle Regional Medical
The global settlement includes a total payment of $262 million, which is
expected to be paid in October 2018. As part of the accounting for the
HMA acquisition by merger, the Company established a liability related
to the legal claims underlying the contingent value right (“CVR”) that
was issued to HMA shareholders as part of the merger consideration. This
liability represented the Company’s best estimate of fair value of the
potential future payments associated with the legal matters assumed in
the HMA merger. This estimate has accordingly been updated over time as
additional facts and circumstances have become known. Based on the
settlement terms and calculation of any payment as defined in the CVR
agreement, the Company anticipates that no distribution will be owed to
Under the terms of the global settlement, the Company’s existing
corporate integrity agreement (CIA) has been amended and extended. The
extension begins immediately and effectively adds two years to the
existing CIA, with the amended CIA now running through 2021.
Commenting on the resolution of the government’s investigation into HMA,
Wayne Smith, chairman and chief executive officer of Community Health
Systems, Inc., said, “Since acquiring HMA in 2014, it has been our goal
to resolve the government’s investigation into all of these allegations
which occurred prior to the acquisition and which were already under
investigation at the time of the transaction. We are pleased to have
reached the settlement agreements so we can move forward now without the
burden or distraction of ongoing litigation. As an organization, we are
committed to doing our very best to always comply with the law in what
is a very complex regulatory environment and to operate our business
with integrity, ethical practices and high standards of conduct.”
Additional background information
In January 2014, Health Management Associates, Inc. was acquired by
merger and became a wholly owned indirect subsidiary of the Company.
HMA was acquired following a volatile period in HMA’s history. At the
time of the acquisition, HMA was facing multiple qui tam
lawsuits and was the subject of criminal and civil investigations.
All of the allegations against HMA and its affiliates preceded the
January 2014 acquisition.
- Community Health Systems was aware of the HMA investigations before
closing the transaction.
Following the acquisition of HMA, Community Health Systems worked
cooperatively with the government in its investigation.
The Company also took immediate steps to remove HMA’s Board of
Directors and senior executives and to integrate HMA affiliated
hospitals into the Community Health Systems compliance program. The
compliance program was voluntarily established more than 20 years ago
and the Company has continuously strengthened the program.
Regarding Carlisle HMA
Carlisle HMA is the entity that previously owned and operated Carlisle
Regional Medical Center during the hospital’s affiliation with HMA.
All of the allegations against Carlisle HMA occurred prior to the
Company’s acquisition of HMA in January 2014. In 2017, Carlisle
Regional Medical Center was divested to another healthcare
organization which is not involved with, or party to, the settlement
About Community Health Systems, Inc.
Community Health Systems, Inc. is one of the largest publicly traded
hospital companies in the United States and a leading operator of
general acute care hospitals in communities across the country. The
Company, through its subsidiaries, owns, leases or operates 118
affiliated hospitals in 20 states with an aggregate of approximately
20,000 licensed beds. The Company’s headquarters are located in
Franklin, Tennessee, a suburb south of Nashville. Shares in Community
Health Systems, Inc. are traded on the New York Stock Exchange under the
symbol “CYH.” More information about the Company can be found on its
website at www.chs.net.
Statements contained in this news release regarding potential
transactions, operating results, and other events are forward-looking
statements that involve risk and uncertainties. Actual future events or
results may differ materially from these statements. Readers are
referred to the documents filed by Community Health Systems, Inc. with
the Securities and Exchange Commission, including the Company’s annual
report on Form 10-K, current reports on Form 8-K and quarterly reports
on Form 10-Q. These filings identify important risk factors and other
uncertainties that could cause actual results to differ from those
contained in the forward-looking statements. The Company undertakes no
obligation to revise or update any forward-looking statements, or to
make any other forward-looking statements, whether as a result of new
information, future events or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180925006216/en/
Source: Community Health Systems, Inc.
Community Health Systems, Inc.
J. Aaron, 615-465-7000
Executive Vice President and Chief Financial
Ross W. Comeaux, 615-465-7012
Vice President –
Senior Vice President, Corporate
Marketing and Public Affairs