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Department of Justice and other government entities regarding various Medicare and Medicaid issues.
−Removed: 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.
+Added: In addition to the matters discussed below, we are currently responding to subpoenas and administrative demands concerning (a) certain emergency care services provided at one of our Texas hospitals;
+Added: (b) billing for certain procedures provided to dual-eligible patients at one of our Arkansas hospitals;
+Added: (c) billing for certain behavioral health services performed at one of our Arkansas hospitals and (d) billing for certain therapeutic drugs at a physician practice affiliated with one of our Pennsylvania hospitals.
+Added: 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 and collection practices 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.
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Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements.
−Removed: Additionally, qui tam or “whistleblower” actions initiated under the civil FCA may be pending but placed under seal by the court to comply with the FCA’s requirements for filing such suits.
+Added: Additionally, qui tam or “whistleblower” actions initiated under the FCA may be pending but placed under seal by the court to comply with the FCA’s requirements for filing such suits.
In September 2014, the Criminal Division of the U.S.
Department of Justice announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened.
−Removed: The Criminal Division has also frequently stated an intention to pursue corporations in criminal prosecutions.
+Added: The Criminal Division has also frequently stated an intention to pursue corporations in criminal prosecutions, including in its most recent Memorandum dated September 15, 2022.
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.
−Removed: 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 CMS and the OIG.
+Added: 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 CMS and the Office of 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 certain legal proceedings 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.
−Removed: 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.
+Added: This discussion does not include claims and lawsuits covered by medical professional liability, 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.
Shareholder Litigation
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The lead plaintiffs filed a consolidated class complaint on January 21, 2020.
−Removed: The Company filed a motion to dismiss the consolidated class complaint on March 23, 2020.
−Removed: That motion is pending.
+Added: The Company filed a motion to dismiss the consolidated class complaint on March 23, 2020, and the District Court denied that motion on August 17, 2022.
We believe this matter is without merit and are vigorously defending this case.
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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.
−Removed: All four cases are stayed by court order until the United States District Court for the Middle District of Tennessee rules on the defendants’ motion to dismiss in the Padilla action.
+Added: Both cases are currently stayed by court order until the United States District Court for the Middle District of Tennessee rules on the defendants’ motion for summary judgment, which has yet to be filed, in the Padilla action.
Qui Tam Litigation
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Bayfront HMA Medical Center, LLC, et al – On September 14, 2017, our former hospital in St.
−Removed: Petersburg, Florida received a civil investigative demand, or CID, from the United States Department of Justice for information concerning its historic participation in the Florida Low Income Pool Program.
+Added: Petersburg, Florida received a civil investigative demand, or CID, from the United States Department of Justice for information
+Added: 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.
−Removed: 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.
+Added: 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 th e Parent C ompany.
We cooperated fully with the investigation.
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The United States has declined to intervene in the case.
−Removed: We filed a motion to dismiss on November 23, 2021.
−Removed: That motion is pending.
+Added: We filed a motion t o dismiss on November 23, 2021, which the District Court granted without prejudice on January 24, 2023.
+Added: The relator filed a First Amended Complaint on February 14, 2023, our response to which is due February 28, 2023.
We believe this matter is without merit and are vigorously defending this case.
Commercial Litigation and Other Lawsuits
−Removed: Steadfast Insurance Company, et al v.
−Removed: Community Health Systems, Inc., CHS/Community Health Systems, Inc., CHSPSC, LLC and Pecos Valley of New Mexico, LLC;
−Removed: Community Health Systems, Inc., et al v.
−Removed: Steadfast Insurance Company, et al;
−Removed: Anne Sperling, et al v.
−Removed: Community Insurance Group SPC, Ltd.
−Removed: 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.
−Removed: Pecos Valley of New Mexico, LLC (“Sperling I”) .
−Removed: 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.
−Removed: The second case, filed by the Company in Delaware Chancery Court, seeks reformation of the subject policies.
−Removed: 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.
−Removed: The Steadfast complaint was served on November 30, 2018.
−Removed: On December 13, 2018, Admiral Insurance Company, Endurance Specialty Insurance Ltd, and
−Removed: Illinois Union Insurance Company moved to intervene in the suit as petitioners.
−Removed: The Company has initiated counterclaims against each insurer in that case, including for bad faith against Steadfast.
−Removed: The Company filed the Community Health Systems complaint on January 22, 2020.
−Removed: Sperling II was filed on July 24, 2019.
−Removed: 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.
−Removed: 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.
−Removed: In November 2021, we settled the remaining Steadfast and Community Health Systems cases with the defendant insurance carriers for a total payment of $22 million by the carriers to the Company, and those remaining cases have been dismissed with prejudice.
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, Statesville HMA, LLC d/b/a Davis Regional Medical Center, Envision Healthcare Corporation f/k/a Emergency Medical Services Corporation, Emcare Holdings, Inc., and Emergency Medical Services, LP .
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Trial for this matter began May 3, 2021, and closed on October 5, 2021.
−Removed: The court has not issued a decision.
−Removed: We believe these claims are without merit and are vigorously defending this case.
+Added: On September 6, 2022, the District Court issued a Memorandum Opinion denying all of Tower Health’s claims and entering a judgment in favor of the Company.
+Added: The district Court also awarded the Company its attorneys’ fees and costs.
+Added: On October 4, 2022, Tower Health filed a Rule 59 motion to alter or amend the District Court’s judgment and a Rule 15 motion to amend its pleadings.
+Added: The Company has filed oppositions to both motions and has separately moved for its attorney’s fees.
+Added: All three motions are pending.
+Added: We believe Tower Health’s post judgment motions are without merit and are vigorously defending this case.
Golden, as Litigation Trustee of the QHC Litigation Trust, and Wilmington Savings Fund Society, FSB, solely in its capacity as indenture trustee v Community Health Systems, Inc., et al .
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The complaint seeks damages and other forms of recovery arising out of certain alleged actions taken by the Company and the other defendants in connection with the spin-off of QHC which was completed on April 29, 2016, and includes claims for unjust enrichment and for avoidance of certain transactions and payments by QHC to the Company connected with the spin-off, including the $1.21 billion special dividend paid by QHC to the Company as part of the spin-off transactions.
−Removed: We filed a motion to dismiss on January 14, 2022.
+Added: We filed a motion to dismiss on January 14, 2022, and oral argument on that motion was heard on July 21, 2022.
+Added: That motion is still pending.
We believe these claims are without merit and will vigorously defend this case.
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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.
−Removed: 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.
+Added: Consistent with New York Stock Exchange and Sarbanes-Oxley independence requirements, the Audit and
+Added: 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.
−Removed: 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
+Added: 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.
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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.