Community Health Systems 2015 Annual Report Download - page 33

calculation of damages. The FCA also contains “qui tam” or whistleblower provisions, which allow private
individuals to bring actions on behalf of the government alleging that the defendant has defrauded the federal
government. If the government intervenes in the action and prevails, the party filing the initial complaint may
share in any settlement or judgment. If the government does not intervene in the action, the whistleblower
plaintiff may pursue the action independently and may receive a larger share of any settlement or judgment.
When a private party brings a qui tam action under the FCA, the defendant generally will not be made aware of
the lawsuit until the government commences its own investigation or determines whether it will intervene. Every
entity that receives at least $5 million annually in Medicaid payments must have written policies for all
employees, contractors and agents providing detailed information about false claims, false statements and
whistleblower protections under certain federal laws, including the FCA, and similar state laws.
A number of states, including states in which we operate, have adopted their own false claims provisions as
well as their own whistleblower provisions whereby a private party may file a civil lawsuit in state court. Federal
law provides an incentive to states to enact false claims laws that are comparable to the FCA. From time to time,
companies in the healthcare industry, including ours, may be subject to actions under the FCA or similar state
laws.
Corporate Practice of Medicine; Fee-Splitting. Some states have laws that prohibit unlicensed persons or
business entities, including corporations, from employing physicians. Some states also have adopted laws that
prohibit direct or indirect payments to, or entering into fee-splitting arrangements with, physicians and
unlicensed persons or business entities. Possible sanctions for violations of these restrictions include loss of a
physician’s license, civil and criminal penalties and rescission of business arrangements. These laws vary from
state to state, are often vague and have seldom been interpreted by the courts or regulatory agencies. We structure
our arrangements with healthcare providers to comply with the relevant state law. However, we cannot be
assured that governmental officials responsible for enforcing these laws will not assert that we, or transactions in
which we are involved, are in violation of these laws. These laws may also be interpreted by the courts in a
manner inconsistent with our interpretations.
Emergency Medical Treatment and Active Labor Act. The Emergency Medical Treatment and Active Labor
Act imposes requirements as to the care that must be provided to anyone who comes to facilities providing
emergency medical services seeking care before they may be transferred to another facility or otherwise denied
care. Sanctions for failing to fulfill these requirements include exclusion from participation in Medicare and
Medicaid programs and civil money penalties. In addition, the law creates private civil remedies which enable an
individual who suffers personal harm as a direct result of a violation of the law to sue the offending hospital for
damages and equitable relief. A medical facility that suffers a financial loss as a direct result of another
participating hospital’s violation of the law also has a similar right. Although we believe that our practices are in
compliance with the law, we can give no assurance that governmental officials responsible for enforcing the law
or others will not assert we are in violation of these laws.
Conversion Legislation. Many states, including some where we have hospitals and others where we may in the
future acquire hospitals, have adopted legislation regarding the sale or other disposition of hospitals operated by
not-for-profit entities. In other states that do not have specific legislation, the attorneys general have
demonstrated an interest in these transactions under their general obligations to protect charitable assets from
waste. These legislative and administrative efforts primarily focus on the appropriate valuation of the assets
divested and the use of the proceeds of the sale by the not-for-profit seller. While these reviews and, in some
instances, approval processes can add additional time to the closing of a hospital acquisition, we have not had
any significant difficulties or delays in completing the process. There can be no assurance, however, that future
actions on the state level will not seriously delay or even prevent our ability to acquire hospitals. If these
activities are widespread, they could limit our ability to acquire hospitals.
Certificates of Need. The construction of new facilities, the acquisition of existing facilities and the addition of
new services at our facilities may be subject to state laws that require prior approval by state regulatory agencies.
These CON laws generally require that a state agency determine the public need and give approval prior to the
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