What changed in this filing

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Item 3. Legal Proceedings

2021-02-18 compared with 2020-02-20 · 104 added, 254 removed, 46 unchanged (89% of the section changed)

Legal Proceedings

From time to time, we receive inquiries or subpoenas from state regulators, state Medicaid Fraud Control units, fiscal

intermediaries, the Centers for Medicare and Medicaid Services, the Department of Justice and other government entities regarding various Medicare and Medicaid issues.

In addition to the matters discussed below, we are currently responding to

subpoenas and administrative demands concerning (a) an inquiry regarding sleep labs at two Louisiana hospitals (one formerly owned), (b) a subpoena related to certain services provided by a formerly-employed physician to Medicaid beneficiaries

at one of our New Mexico hospitals, (c) an inquiry regarding certain services performed by one of our affiliated emergency services companies in Pennsylvania, (d) a civil investigative demand related to call coverage services provided by a

cardiology group at one of our Tennessee hospitals;

and (e) a civil investigative demand related to charges for certain emergency department services at our four New Mexico hospitals.

In addition, we are subject to other claims and lawsuits

arising in the ordinary course of our business including lawsuits and claims related to billing practices and the administration of charity care policies at our hospitals.

Based on current knowledge, management does not believe that loss

contingencies arising from pending legal, regulatory and governmental matters, including the matters described herein, will have a material adverse effect on the consolidated financial position or liquidity of the Company.

However, in light of the

inherent uncertainties involved in pending legal, regulatory and governmental matters, some of which are beyond our control, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these

matters could be material to our results of operations or cash flows for any particular reporting period.

From time to time, we receive inquiries or subpoenas from state regulators, state Medicaid Fraud Control units, fiscal intermediaries, the Centers for Medicare & Medicaid Services, the Department of Justice and other government entities regarding various Medicare and Medicaid issues.

In addition to the matters discussed below, we are currently responding to subpoenas and administrative demands concerning (a) a subpoena related to certain services provided by a formerly-employed physician to Medicaid beneficiaries at one of our New Mexico hospitals, (b) an inquiry regarding certain services performed by one of our affiliated emergency services companies in Pennsylvania, (c) a civil investigative demand related to call coverage services provided by a cardiology group at one of our Tennessee hospitals;

(d) a civil investigative demand related to charges for certain emergency department services at our four New Mexico hospitals and (e) a subpoena related to certain critical care procedures performed at one of our Texas hospitals.

In addition, we are subject to other claims and lawsuits arising in the ordinary course of our business including lawsuits and claims related to billing practices and the administration of charity care policies at our hospitals.

Based on current knowledge, management does not believe that loss contingencies arising from pending legal, regulatory and governmental matters, including the matters described herein, will have a material adverse effect on the consolidated financial position or liquidity of the Company.

However, in light of the inherent uncertainties involved in pending legal, regulatory and governmental matters, some of which are beyond our control, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to our results of operations or cash flows for any particular reporting period.

Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements.

Additionally, qui tam or “whistleblower” actions initiated under the civil False Claims Act may be pending but placed under seal by the court to comply with the False Claims Act’s requirements for filing such suits.

In September 2014,

the Criminal Division of the United States Department of Justice, or DOJ, announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened.

The Criminal Division has also

frequently stated an intention to pursue corporations in criminal prosecutions.

From time to time, we detect issues of non-compliance with Federal healthcare laws pertaining to claims submission and

reimbursement practices

and/or financial relationships with physicians.

We avail ourselves of various mechanisms to address potential overpayments arising out of these issues, including repayment of claims, rebilling of

claims, and participation in voluntary disclosure protocols offered by the Centers for Medicare and Medicaid Services and the Office of the Inspector General.

Participating in voluntary repayments and voluntary disclosure protocols can have the

potential for significant settlement obligations or even enforcement action.

The following legal proceedings are described in detail

because, although they may not be required to be disclosed in this Part I, Item 3 under SEC rules, due to the nature of the business of the Company, we believe that the following discussion of these matters may provide useful information to security

This discussion does not include claims and lawsuits covered by medical malpractice, general liability or employment practices insurance and risk retention programs, none of which claims or lawsuits would in any event be required to be

disclosed in this Part I, Item 3 under SEC rules.

Certain of the matters referenced below are also discussed in Note 15 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form

In September 2014, the Criminal Division of the United States Department of Justice, or DOJ, announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened.

The Criminal Division has also frequently stated an intention to pursue corporations in criminal prosecutions.

From time to time, we detect issues of non-compliance with Federal healthcare laws pertaining to claims submission and reimbursement practices and/or financial relationships with physicians.

We avail ourselves of various mechanisms to address potential overpayments arising out of these issues, including repayment of claims, rebilling of claims, and participation in voluntary disclosure protocols offered by the Centers for Medicare & Medicaid Services and the Office of the Inspector General.

Participating in voluntary repayments and voluntary disclosure protocols can have the potential for significant settlement obligations or even enforcement action.

The following legal proceedings are described in detail because, although they may not be required to be disclosed in this Part I, Item 3 under SEC rules, due to the nature of the business of the Company, we believe that the following discussion of these matters may provide useful information to security holders.

Certain of the matters referenced below are also discussed in Note 15 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K.

Shareholder Litigation

2011 Class Action Shareholder Federal Securities Cases .

Three purported class action cases have been filed in the

United States District Court for the Middle District of Tennessee;

namely, Norfolk County Retirement System v.

Community Health Systems, Inc., et al., filed May 9, 2011;

Community Health Systems, Inc., et al., filed May 12,

and Minneapolis Firefighters Relief Association v.

Community Health Systems, Inc., et al., filed June 21, 2011.

All three seek class certification on behalf of purchasers of our common stock between July 27, 2006 and April 11,

2011 and allege that misleading statements resulted in artificially inflated prices for our common stock.

In December 2011, the cases were consolidated for pretrial purposes and NYC Funds and its counsel were selected as lead plaintiffs/lead

plaintiffs counsel.

In lieu of ruling on our motion to dismiss, the court permitted the plaintiffs to file a first amended consolidated class action complaint which was filed on October 5, 2015.

Our motion to dismiss was filed on

November 4, 2015 and oral argument took place on April 11, 2016.

Our motion to dismiss was granted on June 16, 2016 and on June 27, 2016, the plaintiffs filed a notice of appeal to the Sixth Circuit Court of Appeals.

was heard on May 3, 2017.

On December 13, 2017, the Sixth Circuit reversed the trial courts dismissal of the case and remanded it to the District Court.

We filed a renewed partial motion to dismiss on February 9, 2018, which was

denied by the District Court on September 24, 2018.

We also filed a petition for writ of certiorari with the United States Supreme Court on April 18, 2018 seeking review of the Sixth Circuits decision.

The United States Supreme Court

denied the petition for a writ of certiorari on October 1, 2018.

The District Court granted the Plaintiffs motion for class certification on July 26, 2019.

We filed a petition for permission to appeal the District Courts class

certification order in the Sixth Circuit Court of Appeals on August 9, 2019, and that petition was denied on October 23, 2019.

On January 21, 2020, the Company and the Plaintiff filed a stipulation of settlement indicating to the

District Court that the parties had reached agreement on the principal terms of a settlement for $53 million.

The proposed settlement agreement is subject to the District Courts final approval.

We recorded a liability of $53 million

at December 31, 2019, based on the proposed settlement agreement.

Caleb Padilla, individually and on behalf of all others

similarly situated v Community Health Systems, Inc., Wayne T.

Caleb Padilla, individually and on behalf of all others similarly situated v Community Health Systems, Inc., Wayne T.

Smith, Larry Cash, and Thomas J.

This purported federal securities class action was filed in the United States District Court for the Middle District of Tennessee on

May 30, 2019.

This purported federal securities class action was filed in the United States District Court for the Middle District of Tennessee on May 30, 2019.

It seeks class certification on behalf of purchasers of our common stock between February 20, 2017 and February 27, 2018 and alleges misleading statements resulted in artificially inflated prices for our common stock.

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The lead plaintiffs filed a consolidated class complaint on January 21, 2020.

The deadline for the Companys

response to the consolidated class complaint is March 20, 2020.

The Company filed a motion to dismiss the consolidated class complaint on March 23, 2020.

That motion is pending.

We believe this matter is without merit and will vigorously defend this case.

Padilla Derivative Litigation .

Four purported shareholder derivative cases have been filed in two District Courts

relating to the factual allegations in the Padilla litigation;

Five purported shareholder derivative cases have been filed in two District Courts relating to the factual allegations in the Padilla litigation;

namely, Faisal Hussain v.

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Susheel Tanjavoor v.

Smith, et al., filed August 29,

2019, in the United States District Court for the District of Delaware;

and Roofers Local No.

Smith, et al., filed August 29, 2019, in the United States District Court for the District of Delaware;

Roofers Local No.

149 Pension Fund v.

Clerico, et al, filed October 30, 2019, in the United States District Court for the District of Delaware;

seek relief derivatively and on behalf of Community Health Systems, Inc.

against certain Company officers and directors based on alleged breaches of fiduciary duty, unjust enrichment, and other acts related to certain Company disclosures in 2017 and

2018 regarding the Companys adoption of Accounting Standards Update 2014-09, which the Company adopted effective January 1, 2018.

All four cases have been stayed by agreement.

Section 220 Demand .

On September 19, 2019, the Company received a demand from Kevin Aronson, a Company

shareholder, purporting to demand inspection of certain Company books and records pursuant to Title 8, Section 220 of the Delaware General Corporation Law Code.

The alleged grounds for Mr.

Aronsons demand are similar to the

allegations in both the Padilla and Padilla derivative litigation.

The Company has provided a response to Mr.

Aronsons demand.

and Kevin Aronson v.

Smith, et al , filed April 29, 2020 in the United States District Court for the District of Delaware.

All five seek relief derivatively and on behalf of Community Health Systems, Inc.

against certain Company officers and directors based on alleged breaches of fiduciary duty, unjust enrichment, and other acts related to certain Company disclosures in 2017 and 2018 regarding the Company’s adoption of Accounting Standards Update 2014-09, which the Company adopted effective January 1, 2018.

The defendants filed a Motion to Stay on October 21, 2020, which is pending.

Other Government Investigations

Florida LIP Program CIDs – On September 14, 2017, our hospital in St.

Petersburg, Florida received a CID from the United

States Department of Justice for information concerning its historic participation in the Florida Low Income Pool Program.

The Low Income Pool Program, or LIP, is a funding pool to support healthcare providers that provide uncompensated care to

Florida residents who are uninsured or underinsured.

Petersburg, Florida received a CID from the United States Department of Justice for information concerning its historic participation in the Florida Low Income Pool Program.

The Low Income Pool Program, or LIP, is a funding pool to support healthcare providers that provide uncompensated care to Florida residents who are uninsured or underinsured.

The CID sought documentation related to agreements between the hospital and Pinellas County.

On June 13, 2019, an additional ten of our affiliated hospitals in Florida received CIDs related

to the same subject matter, along with two CIDs addressed to our affiliated management company and the parent company.

On June 13, 2019, an additional ten of our affiliated hospitals in Florida received CIDs related to the same subject matter, along with two CIDs addressed to our affiliated management company and the parent company.

We are cooperating fully with this investigation.

Commercial Litigation and Other Lawsuits

Community Health Systems, Inc.

d/b/a Community Health Systems Professional Services Corporation d/b/a Community Health Systems

d/b/a Community Health Systems PSC, Inc.

d/b/a Rockwood Clinic P.S.

and Rockwood Clinic, P.S.

(Superior Court, Spokane, Washington).

This suit was filed on February 29, 2012, by a former chief financial officer at Rockwood Clinic in

Spokane, Washington.

Becker claims he was wrongfully terminated for allegedly refusing to certify a budget for Rockwood Clinic in 2012.

On February 29, 2012, he also filed an administrative complaint with the Department of Labor, Occupational

Safety and Health Administration alleging that he is a whistleblower under Sarbanes-Oxley, which was dismissed by the agency and was appealed to an administrative law judge for a hearing that occurred on

January 19-26, 2016.

In a decision dated November 9, 2016, the law judge awarded Becker approximately $1.9 million for front pay, back pay and emotional damages with attorney fees to be later

We have appealed the award to the Administrative Review Board and are awaiting its decision.

At a hearing on July 27, 2012, the trial court dismissed Community Health Systems, Inc.

from the state case and subsequently certified the

state case for an interlocutory appeal of the denial to dismiss his employer and the management company.

The appellate court accepted the interlocutory appeal, and it was argued on April 30, 2014.

On August 14, 2014, the court denied our

On October 20, 2014, we filed a petition to review the denial with the Washington Supreme Court.

Our appeal was accepted and oral argument was heard on June 9, 2015.

On September 15, 2015, the court denied our appeal and

remanded to the trial court;

a previous trial setting of September 12, 2016 has been vacated and not reset.

On October 15, 2019, the Administrative Review Board released an order to show cause requiring Becker to file a brief to show cause

why the Administrative Review Board should not remand the previous administrative decision for a new hearing before a new law judge.

The appeal before the Administrative Review Board is still pending.

We continue to vigorously defend these actions.

Cyber Attack.

As previously disclosed on a Current Report on Form 8-K filed by us

on August 18, 2014, our computer network was the target of an external, criminal cyber-attack that we believe occurred between April and June, 2014.

We and Mandiant (a FireEye Company), the forensic expert engaged by us in connection with

this matter, believe the attacker was a foreign Advanced Persistent Threat group who used highly sophisticated malware and technology to attack our systems.

The attacker was able to

bypass our security measures and successfully copy and transfer outside the Company certain non-medical patient identification data (such as patient names, addresses, birthdates, telephone numbers and social

security numbers), but not including patient credit card, medical or clinical information.

We worked closely with federal law enforcement authorities in connection with their investigation and prosecution of those determined to be responsible for

Mandiant has conducted a thorough investigation of this incident and continues to advise us regarding security and monitoring efforts.

We have provided appropriate notification to affected patients and regulatory agencies as required by

federal and state law.

We have offered identity theft protection services to individuals affected by this attack.

All class actions and

litigation filed related to the data breach have been resolved.

We are still responding to two government investigations related to the 2014 cyber-attack.

The first is being conducted by various State Attorneys General, and the second is being

conducted by the U.S.

Department of Health and Human Services Office for Civil Rights.

We are cooperating fully with both investigations.

Empire Health Foundation v.

CHS/Community Health Systems, Inc., CHS Washington Holdings, LLC, Spokane Washington Hospital Company, LLC,

Spokane Valley Washington Hospital Company, LLC.

This suit was filed in the United States District Court for the Eastern District of Washington on June 12, 2017 by Empire Health Foundation claiming Deaconess and Valley Hospitals failed

to abide by charity care obligations allegedly existing in the 2008 Asset Purchase Agreement between Empire Health System and Company affiliates.

The court granted in part and denied in part the hospitals motion to dismiss on October 11,

All parties filed motions for summary judgment, and the court granted in part and denied in part both parties motions on February 27, 2019 and July 9, 2019.

We settled this matter during the three months ended

September 30, 2019 for $22 million (and recorded a liability equal to the settlement amount as of September 30, 2019) and the settlement was paid during the three months ended December 31, 2019.

Gibson, individually and on behalf of all others similarly situated v.

National Healthcare of Leesville, Inc.

d/b/a Byrd Regional Medical

This case is a purported class action lawsuit filed in the 30 th Judicial District Court for the State of Louisiana and served on August 3, 2016, claiming our formerly affiliated

Leesville, Louisiana hospital violated payor contracts by allegedly improperly asserting hospital liens against third-party tortfeasors and seeking class certifications for any similarly situated plaintiffs.

The court has certified a class and

denied our motion for summary judgment.

We appealed both rulings to the Louisiana Third Circuit Court of Appeals, which affirmed the trial courts decisions on March 7, 2019.

We filed an application for writ of certiorari to the Louisiana

Supreme Court, which was denied on May 29, 2019.

Plaintiffs motion for approval of notice of class action was granted on October 24, 2019.

We believe these claims are without merit and will vigorously defend the case.

Bowden, individually and on behalf of all others similarly situated v.

Ruston Louisiana Hospital Company, LLC d/b/a Northern Louisiana

Medical Center.

This case is a purported class action lawsuit filed in the 3 rd Judicial District Court for the State of Louisiana and served on September 7, 2016, claiming our affiliated

Ruston, Louisiana hospital violated payor contracts by allegedly improperly asserting hospital liens against third-party tortfeasors and seeking class certifications for any similarly situated plaintiffs.

Our motion for summary judgment is pending,

as is plaintiffs motion for class certification.

We believe these claims are without merit and will vigorously defend the case.

Zwick Partners, LP and Aparna Rao, individually and on behalf of all others similarly situated v.

Quorum Health Corporation, Community

Health Systems, Inc., Wayne T.

Quorum Health Corporation, Community Health Systems, Inc., Wayne T.

Larry Cash, Thomas D.

Miller, and Michael J.

This purported class action lawsuit previously filed in the United States District Court, Middle District of Tennessee was amended on April 17,

2017 to include Community Health Systems, Inc., Wayne T.

This purported class action lawsuit previously filed in the United States District Court, Middle District of Tennessee was amended on April 17, 2017 to include Community Health Systems, Inc., Wayne T.

Larry Cash as additional defendants.

The plaintiffs seek to represent a class of Quorum Health Corporation, or QHC, shareholders and allege that the failure to record a goodwill

and long-lived asset impairment charge against QHC at the time of the spin-off of QHC violated federal securities laws.

Court denied all defendants motions to dismiss on April 20, 2018.

The plaintiffs seek to represent a class of Quorum Health Corporation, or QHC, shareholders and allege that the failure to record a goodwill and long-lived asset impairment charge against QHC at the time of the spin-off of QHC violated federal securities laws.

The District Court denied all defendants’ motions to dismiss on April 20, 2018.

The plaintiffs moved for class certification.

Plaintiffs also amended their complaint on September 14, 2018.

moved to dismiss the additional claims in the plaintiffs September 14, 2018 amended complaint and responded to plaintiffs class certification motion.

On March 29, 2019, the court granted our motion to dismiss the additional

We moved to dismiss the additional claims in the plaintiffs’ September 14, 2018 amended complaint and responded to plaintiffs’ class certification motion.

On March 29, 2019, the court granted our motion to dismiss the additional claims.

The court granted the plaintiffs’ motion for class certification on that same date.

On April 12, 2019, we filed a petition for permission to appeal the courts order granting class certification with the United States Court of

Appeals for the Sixth Circuit, which was denied on July 31, 2019.

On April 12, 2019, we filed a petition for permission to appeal the court’s order granting class certification with the United States Court of Appeals for the Sixth Circuit, which was denied on July 31, 2019.

On May 17, 2019, the plaintiffs moved to amend their complaint for a third time to add additional claims, which the District Court denied on August 2, 2019.

for this matter is set for July 7, 2020.

We believe the claims are without merit and will vigorously defend the case.

Investments v Quorum Health Corporation;

Community Health Systems, Inc.;

William Norris Jennings;

James Williams.

This case was pending in the Circuit Court for Williamson County, Tennessee and was served on October 26, 2017.

The plaintiff alleged common law fraud and violation of Tennessee securities fraud statutes in

connection with its purchase of QHC stock and QHC senior secured notes.

The court granted in part and denied in part the director defendants motion to dismiss and denied the remaining defendants motions to dismiss on May 11, 2018.

The Company settled and paid this matter during the three months ended December 31, 2019.

All parties have now reached a settlement of this case, which was preliminarily approved by the District Court on July 27, 2020.

On September 17, 2020, Greenlight Capital requested exclusion from the Class.

The defendants have settled with Greenlight Capital, and the District Court granted final approval of the Class settlement on November 30, 2020.

Steadfast Insurance Company, et al v.

Community Health Systems, Inc., CHS/Community Health Systems, Inc., CHSPSC, LLC and Pecos Valley of New Mexico, LLC;

This case is filed in the Superior Court for the State of Delaware and involve suits by four excess liability insurers seeking a

declaration that a $73 million judgment rendered against Pecos Valley of New Mexico, LLC in Anne Sperling, et al v.

Pecos Valley of New Mexico, LLC is not a covered loss as defined by the policies at issue.

The Steadfast complaint was

served on November 30, 2018.

Community Health Systems, Inc., et al v.

Steadfast Insurance Company, et al;

Anne Sperling, et al v.

Community Insurance Group SPC, Ltd.

These cases are filed in the Superior Court for the State of Delaware, the Chancery Court for the State of Delaware, and the First Judicial District Court for the State of New Mexico, respectively, and involve insurance coverage disputes related to a $73 million judgment rendered against Pecos Valley of New Mexico, LLC in Anne Sperling, et al v.

Pecos Valley of New Mexico, LLC (“Sperling I”) .

The first case was brought by Steadfast Insurance Company in Delaware Superior Court seeking a declaration that the Sperling I judgment is not a covered loss as defined by the insurance policies that are the subject of the case.

The second case, filed by the Company in Delaware Chancery Court, seeks reformation of the subject policies.

The third case (“ Sperling II”) , filed by the plaintiffs in Sperling I , seeks recovery from Pecos Valley of New Mexico, LLC’s insurers for the judgment awarded the plaintiffs in their separate, previous action against Pecos Valley of New Mexico, LLC.

The Steadfast complaint was served on November 30, 2018.

On December 13, 2018, Admiral Insurance Company, Endurance Specialty Insurance Ltd, and Illinois Union Insurance Company moved to intervene in the suit as petitioners.

The Company has initiated counterclaims

against each insurer, including for bad faith against Steadfast.

The judgment against Pecos Valley of New Mexico, LLC, which is the subject of this litigation and which was rendered on September 5, 2018, in First Judicial Court of the State of

New Mexico, is currently on appeal to the Court of Appeals of New Mexico.

Trial of this matter is set for December 7, 2020.

We believe the claims in the Steadfast litigation are without merit and will vigorously defend the case.

Becky Kirk, Perry Ayoob, and Dawn Karzenoski, as representatives of a class of similarly situated persons, and on behalf of the

CHS/Community Health Systems, Inc.

The Company has initiated counterclaims against each insurer in that case, including for bad faith against Steadfast.

The Company filed the Community Health Systems complaint on January 22, 2020.

Sperling II was filed on July 24, 2019.

Plaintiffs amended their complaint to add Pecos Valley of New Mexico, LLC as a defendant in that action on May 21, 2020, and Pecos Valley of New Mexico, LLC filed a third party action against certain insurer defendants in the case on July 6, 2020.

On November 12, 2020, Pecos Valley and one of its insurers reached a settlement with the plaintiffs in Sperling I, and as a result the Sperling I case was dismissed with prejudice on November 19, 2020.

The Steadfast,

Community Health Systems, Inc.

and Sperling II cases remain pending.

Trial in the Steadfast and Community Health Systems, Inc.

consolidated cases is set for December 13, 2021.

Trial in the Sperling II case is set for January 30, 2022.

The Company will vigorously defend and prosecute those cases.

Becky Kirk, Perry Ayoob, and Dawn Karzenoski, as representatives of a class of similarly situated persons, and on behalf of the CHS/Community Health Systems, Inc.

Retirement Savings Plan v.

Retirement Committee of CHS/Community Health Systems, Inc., John and Jane Does 1-20, Principal Life Insurance Company, Principal Management

Corporation, and Principal Global Investors, LLC.

Retirement Committee of CHS/Community Health Systems, Inc., John and Jane Does 1-20, Principal Life Insurance Company, Principal Management Corporation, and Principal Global Investors, LLC.

This purported class action was filed in the United States District Court for the Middle District of Tennessee on August 8, 2019.

The plaintiffs seek to represent a class of current and

former participants in the CHS/Community Health Systems, Inc.

Retirement Savings Plan and allege that the defendants breached their fiduciary duties by offering certain investments in the Plan that were more expensive and/or did not perform as well

as other marketplace alternatives.

We filed a motion to dismiss the complaint on October 18, 2019, which is pending.

The plaintiffs seek to represent a class of current and former participants in the CHS/Community Health Systems, Inc.

Retirement Savings Plan and allege that the defendants breached their fiduciary duties by offering certain investments in the Plan that were more expensive and/or did not perform as well as other marketplace alternatives.

We have reached a tentative, immaterial settlement with the plaintiffs which was preliminarily approved by the District Court on December 8, 2020.

The Final Fairness Hearing for the settlement is set for April 12, 2021.

Thomas Mason, MD, Steven Folstad, MD and Mid-Atlantic Emergency Medical Associates, PA v Health Management Associates, LLC f/k/a Health Management Associates, Inc., Mooresville Hospital Management Associates d/b/a Lake Norman Regional Medical Center and Statesville HMA, LLC d/b/a Davis Regional Medical Center, Envision Healthcare Corporation f/k/a Emergency Medical Services Corporation, Emcare Holdings, Inc., Emergency Medical Services, LP .

This alleged wrongful retaliation case is filed in the United States District Court for the Western District of North Carolina.

The plaintiffs allege their agreements with the defendants were terminated in retaliation for plaintiffs’ alleged refusal to admit patients unnecessarily to the defendant hospitals or otherwise perform unnecessary diagnostic testing.

The allegations of the complaint relate to time periods prior to the hospitals’ affiliation with the Company.

The plaintiffs filed a Third Amended Complaint on April 26, 2019.

The defendants filed motions to dismiss, which were granted in part and denied in part on September 5, 2019.

Trial of this matter is set for January 3, 2022.

We believe these claims are without merit and will vigorously defend the case.

Tower Health, f/k/a Reading Health System, et al v CHS/Community Health Systems, Inc., et al .

This breach of contract action is pending in the United States District Court for the Eastern District of Pennsylvania.

The plaintiffs allege breaches of an asset purchase agreement in connection with the sale of Pottstown Memorial Medical Center.

The alleged breaches regard plaintiffs’ contention that the defendants failed to disclose certain conditions related to the physical plant of the hospital, along with various other alleged breaches of the asset purchase agreement.

The plaintiffs filed an amended complaint on July 22, 2019.

Both parties have filed motions for summary judgment, which are pending.

Trial for this matter is set for May 3, 2021.

We believe these claims are without merit and will vigorously defend the case.

Qui Tam Matters Where the Government Declined Intervention

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Blake Vanderlan, M.D.

Jackson HMA, LLC d/b/a Central Mississippi Medical Center and Merit

Health Central.

Jackson HMA, LLC d/b/a Central Mississippi Medical Center and Merit Health Central.

By order filed on August 31, 2017, the United States District Court for the Southern District of Mississippi ordered the unsealing of this qui tam suit.

The unsealing revealed that on August 31, 2017 the United States

had declined to intervene in the allegations that certain alleged EMTALA violations at the hospital resulted in a violation of the False Claims Act.

Both the hospital and the United States have filed motions to dismiss the litigation, and those

motions are pending.

We believe this matter is without merit and will vigorously defend this case.

Derek Lewis and Joey Neiman v.

Community Health Systems, Inc., Medhost, Inc., et

By order filed on March 14, 2019, the United States District Court for the Southern District of Florida ordered the unsealing of this qui tam suit.

The order revealed that the United States had declined to intervene in the action.

complaint alleges that Community Health Systems, Inc.

and its affiliated hospitals (CHS Hospitals) violated the False Claims Act by submitting claims for EHR Meaningful Use incentive payments that they knew or should have known were false.

allegations regarding falsity generally relate to the CHS Hospitals use of certain software products sold to them by co-defendant, Medhost, Inc.

The plaintiffs amended their complaint on July 26,

We filed a motion to dismiss the complaint on September 24, 2019, which is pending.

We believe this matter is without merit and will vigorously defend this case.

The unsealing revealed that on August 31, 2017 the United States had declined to intervene in the allegations that certain alleged EMTALA violations at the hospital resulted in a violation of the False Claims Act.

Both the hospital and the United States have filed motions to dismiss the litigation, and on January 5, 2021, the District Court granted the United States’ Motion to Dismiss and ordered all of the plaintiff’s claims dismissed with prejudice save one claim against the hospital for retaliation.

The hospital will have an opportunity to file a new motion to dismiss with respect to the remaining claim.

We believe the retaliation claim is without merit and will vigorously defend this case.

Elie Hage-Korban, M.D., Delta Clinics, PLC d/b/a The Heart and Vascular Center of West Tennessee.

Community Health

Systems, Inc., Knoxville HMA Holdings, LLC d/b/a/ Tennova Healthcare, Jackson Hospital Corporation d/b/a/ Regional Jackson, and Dyersburg Hospital Company, LLC, d/b/ Dyersburg Regional Medical Center .

By order filed on April 30, 2019, the

United States District Court for the Western District of Tennessee ordered the unsealing of this qui tam lawsuit.

Community Health Systems, Inc., Knoxville HMA Holdings, LLC d/b/a/ Tennova Healthcare, Jackson Hospital Corporation d/b/a/ Regional Jackson, and Dyersburg Hospital Company, LLC, d/b/ Dyersburg Regional Medical Center .

By order filed on April 30, 2019, the United States District Court for the Western District of Tennessee ordered the unsealing of this qui tam lawsuit.

The order revealed that the United States had declined to intervene in the action.

The complaint alleges the defendants violated the

False Claims Act by submitting claims for payment related to certain cardiac procedures performed by defendant Dr.

The complaint alleges the defendants violated the False Claims Act by submitting claims for payment related to certain cardiac procedures performed by defendant Dr.

Elie Hage-Korban at two hospitals formerly affiliated with the Company.

Hage-Korban was not employed by either hospital

or their affiliates.

Hage-Korban was not employed by either hospital or their affiliates.

The plaintiff amended his complaint on July 24, 2019.

We filed a motion to dismiss the complaint on September 30, 2019, which is pending.

We believe this matter is without merit and will vigorously defend this case.

We filed a motion to dismiss the complaint on September 30, 2019, which the District Court granted on February 25, 2020.

On March 18, 2020, the plaintiff filed a Notice of Appeal to the United States Court of Appeals for the Sixth Circuit of all claims except those related to defendant Community Health Systems, Inc.

On December 1, 2020, the Sixth Circuit affirmed the District Court’s dismissal of the complaint.

Management of Significant Legal Proceedings

In accordance with our governance documents, including our Governance Guidelines and the charter of the Audit and Compliance Committee, our

management of significant legal proceedings is overseen by the independent members of the Board of Directors and, in particular, the Audit and Compliance Committee.

The Audit and Compliance Committee is charged with oversight of compliance,

regulatory and litigation matters, and enterprise risk management.

Management has been instructed to refer all significant legal proceedings and allegations of financial statement fraud, error, or misstatement to the Audit and Compliance Committee

for its oversight and evaluation.

members of the Audit and Compliance Committee are audit committee financial experts as defined in the Securities Exchange Act of 1934, as amended.

In addition, the Audit and Compliance Committee and the other independent members of the Board of Directors oversee the functions of the

voluntary compliance program, including its auditing and monitoring functions and confidential disclosure program.

In recent years, the voluntary compliance program has addressed the potential for a variety of billing errors that might be the

subject of audits and payment denials by the CMS Recovery Audit Contractors permanent project, including MS-DRG coding, outpatient hospital and physician coding and billing, and medical necessity for

services (including a focus on hospital stays of very short duration).

Efforts by management, through the voluntary compliance program, to identify and limit risk from these government audits have included significant policy and guidance revisions,

training and education, and auditing.

Services Office of the Inspector General during 2014 and which was amended and extended in September 2018.

Safety Disclosures

In accordance with our governance documents, including our Governance Guidelines and the charter of the Audit and Compliance Committee, our management of significant legal proceedings is overseen by the independent members of the Board of Directors and,

in particular, the Audit and Compliance Committee.

The Audit and Compliance Committee is charged with oversight of compliance, regulatory and litigation matters, and enterprise risk management.

Management has been instructed to refer all significant legal proceedings and allegations of financial statement fraud, error, or misstatement to the Audit and Compliance Committee for its oversight and evaluation.

Consistent with New York Stock Exchange and Sarbanes-Oxley independence requirements, the Audit and Compliance Committee is comprised entirely of individuals who are independent of our management, and all four members of the Audit and Compliance Committee are “audit committee financial experts” as defined in the Securities Exchange Act of 1934, as amended.

In addition, the Audit and Compliance Committee and the other independent members of the Board of Directors oversee the functions of the voluntary compliance program, including its auditing and monitoring functions and confidential disclosure program.

In recent years, the voluntary compliance program has addressed the potential for a variety of billing errors that might be the subject of audits and payment denials by the CMS Recovery Audit Contractors’ permanent project, including MS-DRG coding, outpatient hospital and physician coding and billing, and medical necessity for services (including a focus on hospital stays of very short duration).

Efforts by management, through the voluntary compliance program, to identify and limit risk from these government audits have included significant policy and guidance revisions, training and education, and auditing.

The Board of Directors now oversees and reviews periodic reports of our compliance with the Corporate Integrity Agreement, or CIA, that we entered into with the United States Department of Health and Human Services Office of the Inspector General during 2014 and which was amended and extended in September 2018.

Mine Safety Disclosures

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings