Christus Health Paying $12.2 Million to Settle Whistleblower Suit

Irving-based Christus Health and its Santa Fe, N.M., hospital will pay $12.2 million to the federal government, settling a whistleblower lawsuit. Washington, D.C.-based Phillips & Cohen alleged that Christus and its Santa Fe hospital, St. Vincent Regional Medical Center, “manipulated federal funding for an indigent care program to boost their revenues.”

According to Phillips & Cohen, the alleged scheme involved New Mexico’s sole community provider fund, sole community provider supplemental payments programs, and “donations” St. Vincent made to Santa Fe County. It’s believed the donations were cover-ups for the state’s share of funding “needed to obtain federal matching funds from 2001 to 2009,” according to the lawsuit.

The sole community provider programs use state and federal funds to pay hospitals’ costs for treating indigent persons, or those too poor to have medical insurance. In New Mexico, these programs must provide an estimated $1 for every $3 the federal government pays to cover these expenses. Hospitals can draw lump sums from the program on a quarterly basis.

The complaint states that Christus and its St. Vincent hospital “transformed donations to Santa Fe County into discretionary supplemental Medicaid payments” that refunded St. Vincent in full for its donations, and paid St. Vincent “additional amounts of unwarranted federal funding that total approximately three times the amount of the hospital’s investment in such refunded ‘donations.’”

The complaint alleges that Christus and St. Vincent “knowingly claimed and received increases in discretionary Medicaid payments through those programs that they knew they were not properly eligible to receive.”

The lawsuit was filed by Phillips & Cohen on behalf of Diana Stepan, the “whistleblower,” in New Mexico’s federal district court in 2011.

Stepan was the indigent health care administrator for Los Alamos County from 2002 to 2011. New Mexico’s indigent program is now closed, and the events allegedly occurred before it shut down in 2014. Reportedly the federal government joined the case after investigating the allegations.

The complaint says Stepan noticed St. Vincent’s donations to Santa Fe County “were sham transactions designed and implemented specifically to bilk the federal treasury.”

Peter Chatfield, a partner at Phillips & Cohen who worked on the case, said Stepan died last year. “Her estate will receive the award” for the information and work her attorneys provided to recover taxpayer funds, he told D CEO Healthcare. This totals more than 18 percent of the government’s recovery, according to the False Claims Act.

Christus told D CEO Healthcare in a statement that prior to the filing of the lawsuit and during its participation in the program during 2001-2013, the hospital worked “cooperatively with the Centers for Medicare & Medicaid Services, Santa Fe County, and the State of New Mexico.”

Furthermore, the hospital stated its arrangements were lawful, transparent, and a matter of public record. But “despite this transparency,” Christus said in a statement, “the lawsuit alleged that because the hospital financially supported these community health initiatives, funds transferred by Santa Fe County to the State in support of the New Mexico Medicaid sole community provider program were improper.”

“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,” the statement read. “Under the terms of the settlement agreement, there is no admission of illegal conduct, and the allegations of the lawsuit are expressly denied by Christus Health and the hospital.”

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