Christus Health to pay $12M to settle whistleblower suit

Whistleblower
Christus Health will settle a whistleblower suit for $12.2 million. (Getty/Imilian)

Christus Health and its hospital in Santa Fe, New Mexico, will pay $12.2 million in a settlement after a whistleblower alleged the hospital manipulated funding for an indigent-care program to increase revenues.

Whistleblower attorneys Phillips & Cohen, LLC, filed a suit (PDF) that accused the international Catholic, faith-based, not-for-profit health system and St. Vincent Regional Medical Center of manipulating donations to Santa Fe County to boost federal payouts. The system turned “non-bona fide” donations into payouts worth three times the original refunded donation, according to the lawsuit.

The hospital made a number of these payments between 2001 and 2009, according to the Department of Justice.

"Medicaid regulations prohibit healthcare providers from donating funds for local and state governments to use as their contributions to the Sole Community Provider programs," Stephen S. Hasegawa, a whistleblower attorney with Phillips & Cohen, said in an announcement of the settlement. "The restriction on donations forces those governments to have a stake in the costs of healthcare for indigent patients, so that they keep an eye on expenditures."

The DOJ echoed that sentiment in a statement, saying current healthcare law "provides an incentive for the counties and states to, among other things, hold down costs rather than rely on non-bona fide donations." The Sole Community Provider program is no longer operating.

Christus Health, which is based in Irving, Texas, maintains that the payments were "lawful, transparent and a matter of public record, and were well known by all stakeholders," it said in a statement submitted to FierceHealthcare. Under the terms of the settlement, neither the system nor hospital admits to any illegal activity or wrongdoing, it said.

"We have determined that continued expenditure of time and resources in defense of these allegations is not in the best interests of the Santa Fe community or the hospital," Christus said in the statement. "We look forward to continuing our focus on the provision of high-quality, compassionate healthcare to the people of Santa Fe County and beyond."

The case was filed on behalf of Diana Stepan, the former indigent-care administrator for a neighboring county, and the federal government later joined the investigation. Stepan has since died, and her estate will receive a whistleblower award of 18% of the federal government’s recovery.

RELATED: Whistleblower doctor files lawsuit over concurrent surgeries at Massachusetts General Hospital

The DOJ said that the case shows how strongly it is committed to protecting the Medicaid program across the country.

A number of other cases this year were sparked by whistleblowers. Benjamin Poehling, a UnitedHealth executive-turned-whistleblower, said insurers, for instance, have set up a “perfect scheme” to game Medicare and improve their bottom lines.

United Health, for its part, denied the allegations.

Doctors in both New York state and Massachusetts have alleged that hospitals are making extra money on concurrent surgeries that could put patients at risk.

Editor's note: This story was updated on Sept. 5 to reflect additional comment from Christus Health and the Department of Justice.