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Community Health unit to pay $260 mln to resolve U.S. fraud probe

(Adds details on settlement)

By Nate Raymond

Sept 25 (Reuters) - A hospital operator now owned by Community Health Systems Inc will pay more than $260 million to resolve claims it defrauded government health care programs and paid doctors kickbacks for patient referrals, the U.S. Justice Department said on Tuesday.

Health Management Associates, which Community Health acquired in 2014, agreed to pay the sum to resolve criminal and civil claims as part of a deal in which a subsidiary also agreed to plead guilty to conspiring to commit health care fraud.

Franklin, Tennessee-based Community Health did not immediately respond to a request for comment. A lawyer for Naples, Florida-based HMA declined to comment.

According to the Justice Department, HMA beginning in 2008 defrauded government health care programs like Medicare and Medicaid by illegally pressuring and inducing doctors into increasing the number of emergency department patient admissions.

Those admissions were made without regard to whether the they were medically necessary, prosecutors said. They said as a result, HMA hospitals billed health care programs for inpatient services that pay more than observation or outpatient care.

The Justice Department said HMA set mandatory admissions rate benchmarks for patients presented at hospital emergency departments in order to boost its revenue and threatened to fire doctors who did not increase admissions.

From 2003 to 2011, two of HMA's hospitals in Florida also billed federal health care programs for services referred to them by doctors who received free office space and direct payments in exchange, the Justice Department said.

Two hospitals owned by HMA in Pennsylvania also made excessive payments to a large physician group and a local surgeon in exchange for patient referrals, the Justice Department said.

Under the settlement, HMA entered into a three-year non-prosecution agreement with the Justice Department, while a subsidiary, Carlisle HMA, LLC, agreed to plead guilty to a charge filed in federal court in Washington, D.C. (Reporting by Nate Raymond in Boston; Editing by Cynthia Osterman)