Lawsuit claims CHS failed to provide up to $110M in charity care

A nonprofit group filed a lawsuit Monday against Franklin, Tenn.-based Community Health Systems, alleging the for-profit hospital operator failed to provide sufficient charity care at two of its Washington hospitals, according to the Nashville Business Journal.

Empire Health Foundation, a nonprofit formed with the proceeds from the sale of Spokane, Wash.-based Empire Health to CHS in 2008, filed the lawsuit in U.S. District Court. Empire Health, which included 388-bed Deaconess Hospital in Spokane and 123-bed Valley Hospital in Spokane Valley, Wash., dissolved with the sale to CHS and the foundation took on the obligations and rights of the system.

Empire Health Foundation alleges that when CHS acquired Deaconess Hospital and Valley Hospital it agreed to provide charity care at levels at least equal to the average provided by hospitals in Eastern Washington. The foundation claims CHS' charity care spending fell at least $55 million below the levels promised. The suit says that figure could reach $110 million because CHS allegedly inflated the value of the charity care it did provide, according to the report.

The lawsuit accuses CHS of breach of contract and breach of implied duty of good faith and fair dealing and seeks damages and an injunction to force CHS to meet the charitable care conditions in the sales contract.

Tomi Galin, senior vice president for corporate communications and marketing at CHS, told The Spokesman Review that CHS will contest the lawsuit. She said state law requires CHS to only make "reasonable efforts" to meet charity care averages for Eastern Washington.

The foundation filed the lawsuit as CHS is divesting the two hospitals. CHS signed a definitive agreement in November to sell Deaconess Hospital and Valley Hospital to Tacoma, Wash.-based MultiCare for $425 million.

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