CHS sued by collections agency

Franklin, Tenn.-based Community Health Systems (CHS) Inc., which operates 122 hospitals with approximately 18,000 licensed beds in 29 states, is being sued by Managed Care Solutions (MCS) Inc. for breach of contract, says the Nashville Business Journal. The Hollywood, Fla.-based collections agency claims it was fired by the hospital chain on the pretext of the alleged arrest of a third-party employee.

MCS says that it signed an exclusive three-year deal in 2003 to manage and collect payments for all CHS hospitals, which then numbered 111, for a 22 percent cut of collections. However, CHS didn't provide adequate paperwork for 109 of the hospitals, and MCS invested more than $1.2 million in collections software to provide services to CHS, the company claims.

The suit alleges that CHS was already trying to find a way out of the deal when it learned that an MCS employee had been arrested for identity theft for stealing patients' confidential information at a New Jersey hospital. CHS then canceled the contract, citing a material breach. MCS maintains that the employee actually worked for a third-party staffing firm and that it has no proof the employee either stole patient information or was arrested. MCS also says that the employee shouldn't have had access to such information, holding CHS accountable and suggesting potential HIPAA violations.

To learn more about the lawsuit:
- read the Business Journal article

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