Community Health Systems 2015 Annual Report Download - page 51

If we become subject to significant legal actions, we could be subject to substantial uninsured liabilities or
increased insurance costs.
Physicians, hospitals and other healthcare providers have become subject to an increasing number of legal
actions alleging malpractice, product liability, or related legal theories. Even in states that have imposed caps on
damages, litigants are seeking recoveries under new theories of liability that might not be subject to the caps on
damages. Many of these actions involve large claims and significant defense costs. To protect us from the cost of
these claims, we maintain claims made professional malpractice liability insurance and general liability insurance
coverage in excess of those amounts for which we are self-insured. This insurance coverage is in amounts that we
believe to be sufficient for our operations; however, our insurance coverage may not continue to be available at a
reasonable cost for us to maintain adequate levels of insurance. Additionally, our insurance coverage does not
cover all claims against us, such as fines, penalties, or other damage and legal expense payments resulting from
qui tam lawsuits.
We could be subject to increased monetary penalties and/or other sanctions, including exclusion from federal
health care programs, if we fail to comply with the terms of the Corporate Integrity Agreement.
On August 4, 2014, we announced that we had entered into a civil settlement with the U.S. Department of
Justice, other federal agencies and identified relators that concluded previously announced investigations and
litigation related to short stay admissions through emergency departments at certain of our affiliated hospitals.
See our discussion of this matter under the section “Business of Community Health Systems, Inc.” in Part I,
Item 1 of this Form 10-K and “Legal Proceedings” in Part II, Item 1 of our Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 2014 for further discussion of the background of this matter and details
of the settlement. In addition to the amounts paid in the settlement, we executed the CIA with the OIG that has
been incorporated into our existing and comprehensive compliance program.
Material, uncorrected violations of the CIA could lead to our suspension or disbarment from participation in
Medicare, Medicaid and other federal and state healthcare programs and repayment obligations. In addition, we
are subject to possible civil penalties for failure to substantially comply with the terms of the CIA, including
stipulated penalties ranging between $1,000 to $2,500 per day. We are also subject to a stipulated penalty of
$50,000 for each false certification made by us or on our behalf, pursuant to the reporting provisions of the CIA.
The CIA increases the amount of information we must provide to the federal government regarding our
healthcare practices and our compliance with federal regulations. The reports we provide in connection with the
CIA could result in greater scrutiny by regulatory authorities.
If we experience growth in self-pay volume and revenues, or if we experience continued deterioration in the
collectability of patient responsibility accounts, our financial condition or results of operations could be
adversely affected.
Our primary collection risks relate to uninsured patients and outstanding patient balances for which the
primary insurance payor has paid some but not all of the outstanding balance, with the remaining outstanding
balance (generally deductibles and co-payments) owed by the patient. Collections are impacted by the economic
ability of patients to pay and the effectiveness of our collection efforts. Significant changes in payor mix,
business office operations, economic conditions or trends in federal and state governmental healthcare coverage
may affect our collection of accounts receivable and are considered in our estimates of accounts receivable
collectability.
Since the implementation of the Reform Legislation, our self-pay revenues as a percentage of total revenue
have decreased, primarily resulting from a shift from self-pay to Medicaid and private insurers for a portion of
our patient population, driven by the insurance coverage expansion provisions of the Reform Legislation. In
addition, the Reform Legislation’s future impact on the uninsured population and the percentage of our total
revenue comprised of self-pay revenues may be different than anticipated because of, among other variables,
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