By: Christopher A. Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, Ma.
A Health Law Defense and Compliance Firm

Community Health Network (CHN) in Indiana has agreed to pay $345 million to settle allegations of violating the Stark Law by compensating physicians excessively and rewarding them for referrals. This marks the largest False Claims Act (FCA) settlement related to Stark Law violations to date.

The fair market value (FMV) aspect is critical in the CHN settlement. The allegations centered on CHN paying physicians above FMV, which violated the Stark Law. Despite advice from valuation firms that some compensations were excessive, CHN continued these payments. Ensuring compensation aligns with FMV is crucial to avoid improper financial incentives that could influence medical judgment. The DOJ’s focus on FMV in this settlement highlights the need for healthcare providers to rigorously adhere to FMV standards to ensure compliance and avoid legal repercussions.

The settlement includes a five-year corporate integrity agreement (CIA) mandating that an independent review organization (IRO) review both fee-for-service claims and arrangements for compliance with the Anti-Kickback Statute and Stark Law. Additionally, the HHS Office of Inspector General (OIG) requires CHN to hire a compliance expert to evaluate its compliance program. These reports will be reviewed by the board and submitted to the OIG.

This significant settlement underscores the importance of adhering to fair-market value in physician compensation and the heightened scrutiny on compliance programs.

If you have questions regarding this Stark scenario and settlement or need assistance with compliance issues, contact Parrella Health Law at 857-328-0382 or email me at cparrella@parrellahealthlaw.com. We’re here to help navigate these complex rules and regulations and ensure your organization remains compliant.

Christopher Parrella, ESQ, CPC, CHC, CPCO, is the founding partner of Parrella Health Law in Boston, Mass. The firm focuses exclusively on healthcare defense and compliance matters. Chris also travels the country on behalf of a wide range of healthcare organizations, lecturing on a variety of health care enforcement and compliance topics. Chris is one of a handful of health care attorney’s that are also Certified Professional Coders (CPC) and is a member of the AAPC’s National Legal Advisory Board and Ethics Committee.  He is also a Certified Professional Compliance Officer (CPCO) and Certified in Health Care Compliance (CHC.)