01-06-2025
‘Grotesque.' How Fresno leaders are reacting to alleged hospital kickback scheme
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Fresno area elected officials are demanding more transparency and accountability after an alleged kickback scheme orchestrated by a group of executives from the region's largest healthcare system came to light.
Earlier this month, the U.S. Attorney's Office announced that Community Health System (CHS) and healthcare technology affiliate Physician Network Advantage Inc. (PNA) agreed to pay a $31 million fine to settle allegations that they violated the False Claim Act.
Some of the region's public leaders told The Bee they are disappointed in the healthcare system's previous leadership and would push for increased accountability. They expressed bewilderment that the executives were able to carry out the fraud scheme, undetected, for more than a decade.
An unsealed whistleblower lawsuit filed by former PNA Controller Michael Terpening detailed the alleged scheme and listed more than a dozen gifts and donations provided to a select group of medical leaders. The gifts included access to a state-of-the-art wine and cigar lounge, expensive trips to Europe, Napa Valley and Las Vegas, trips to strip clubs, and nepotism hires.
Representative Jim Costa, D-Fresno, said the complaints in this case are serious and need to be addressed.
'Clearly, there is a need for strong oversight and transparency in our healthcare system,' Costa said. 'We must ensure that public trust and taxpayer dollars are never compromised by improper financial incentives. The people of the San Joaquin Valley deserve the best possible healthcare system that operates with integrity.'
Assemblymember Dr. Joaquin Arambula, a Democrat from Fresno and physician, said in a statement that 'these revelations are grotesque, to say the least.'
'These episodes, brought to light only because a whistleblower did so, clearly stemmed from a warped sense of entitlement. My hope is that the new leadership of CHS will right this ship and reflect the true heroes of CHS — the dedicated and compassionate workers who every day in CHS hospitals and clinics care for and heal the people of our Valley,' Arambula said.
Community Health System (CHS), Fresno's largest healthcare group, owns downtown Fresno's Community Regional Medical Center and the Clovis Community Medical Center, as well as a health plan and physician network. Community Medical Centers (CMC) is the name of the group that includes the hospitals and clinics under the CHS umbrella.
CHS is the the leading healthcare provider in the central San Joaquin Valley and owns the only level one trauma center in the region.
Assemblymember Esmeralda Soria, whose district includes west Fresno County, Madera and Merced, called the lawsuit and settlement 'unfortunate' and stressed the impact on patients receiving federally subsidized care and whose healthcare access is jeopardized by significant federal funding cuts.
'The other loser in this settlement is Medi-Cal and Medicaid patients, who are already suffering from the federal government's proposed cuts to these programs. Moving forward, I hope leadership and boards for both CHS and PNA make serious changes in their approach to regain the community's trust and putting patients first above all else,' Soria said.
In a statement on the settlement, CHS Board Chair Roger Sturdevant said the current board and leadership team recognizes they are accountable to assuring compliance that is consistent with regulatory requirements and their own standards. CHS leadership has cooperated with the U.S. Attorneys' Office in its review, Sturdevant said.
'Based on both our own internal assessment and external findings, we have identified and addressed areas for improvement. We are confident that our policies and procedures today address all areas of concern. It is important to note, that at no time were patients inappropriately billed and this issue had no impact on our clinicians' ability to provide outstanding care,' he said.
As part of the settlement, CHS has entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General that requires a risk assessment and internal review process designed to identify and address evolving compliance risks. The agreement also requires an independent review organization to annually assess the policies and systems to track arrangements with some referral sources.
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Fresno County Supervisor Nathan Magsig, whose district includes part of Fresno, Clovis and the rural foothill communities, said he's looked into the case that focuses on Community's implementation of electronic health record system, and the associated vendor relationship.
'This is a difficult time for hospitals across the nation, which is why the settlement is particularly disheartening. But I'm confident in Community's current leadership,' Magsig said. 'They have identified and addressed the government's concerns and I believe Community's leadership and board will do everything they can to assure its approach to vendor relationships, and reporting practices are solid to avoid this ever happening again.'
Fresno County Supervisor and Vice Chairman Garry Bredefeld called the conduct by CHS and affiliate PNA 'disgraceful and shameful.'
'They violated the trust of their patients by providing extravagant benefits and kickbacks to executives and some physicians in order to entice them to refer their patients to Community,' he said.
Bredefeld, a retired clinical psychologist, said the medical community already lost confidence and trust of the public with their 'mishandling of the COVID-19 pandemic.'
'Now this corruption has been exposed which will further diminish the trust. I applaud the (Department of Justice) for their work and ensuring that there now will be greater oversight of these institutions, so this corruption never occurs again,' he said.
Fresno County District 3 Supervisor Luis Chavez, said he was 'deeply disappointed' by the details that have come to light in the settlement and wanted to see concrete change to restore trust.
'I've met directly with the new CEO and had frank, honest conversations about the urgent need to rebuild community trust,' Chavez said. 'I made it clear that restoring confidence in our healthcare system requires more than words, it requires action. The new leadership team has assured me of their commitment to downtown Fresno and to delivering care that puts patients first. But assurances alone won't move the needle.'
'We need to see real, measurable improvements, starting with transparency, reducing emergency room wait times and ensuring that life-saving services are readily available to every corner of our city. I will continue to hold this hospital system accountable and remain steadfast in advocating for the health, safety, and dignity of every Fresno resident,' he said.
