Community Health Systems 2015 Annual Report Download - page 69

June 20, 2014 the plaintiffs appealed to the Eleventh Circuit, where oral argument was heard on February 6,
2015. On May 11, 2015, the Eleventh Circuit Court affirmed the granting of the motion to dismiss. On June 11,
2015, plaintiffs filed an application for an en banc review. We intend to vigorously defend against the allegations
in this lawsuit. We are unable to predict the outcome or determine the potential impact, if any, that could result
from its final resolution.
Wrongful Termination Lawsuits
William J. Schoen vs. Health Management Associates, Inc. Schoen, former Chairman of the Board of HMA,
filed suit against HMA on June 27, 2014 alleging breach of contract for a lump sum termination payment, certain
airplane usage rights and underpayment of his SERP. He also seeks declaratory judgment that he and his spouse
are entitled to lifetime health insurance benefits. On July 25, 2014, the matter was removed to the United States
District Court for the Middle District of Florida. On September 22, 2014, we filed a motion to dismiss this
matter, which was granted in part and denied in part. This matter has now been settled and dismissed.
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. Consistent with New York Stock Exchange, NASDAQ and Sarbanes-Oxley
independence requirements, the Audit and Compliance Committee is comprised entirely of individuals who are
independent of Company management, and all three members of the Audit and Compliance Committee are
“audit committee financial experts” as defined in the Exchange Act.
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 the Company’s compliance with the
Corporate Integrity Agreement, or CIA, that the Company entered into with the United States Department of
Health and Human Services Office of the Inspector General during 2014.
For the past several years, our Board of Directors has met monthly to review the status of the lawsuits and
investigations relating to allegations of improper billing for inpatient care at our hospitals and to oversee
management in connection with our investigation and defense of these matters. Following the consummation of
the HMA merger, these meetings have been expanded to include the review and oversight of the legal
proceedings related to HMA that are covered by the CVR. The independent members of our Board of Directors
remain fully engaged in the oversight of these matters.
Item 4. Mine Safety Disclosures
Not applicable.
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