While Community Health System was involved in an alleged scheme rewarding doctors for their referrals with expensive liquor, cigars, and a state-of-the-art lounge, it accepted $2.7 million from Fresno County for new medical equipment.

At the time, county officials had no idea of what was transpiring within Community as the kickback scheme wasn’t exposed until May of this year by federal prosecutors.

In August 2022, during the COVID-19 pandemic, Fresno County gave the hospital system the money to pay for a CT scanner and six beds for its intensive care unit. Funding came from the county’s American Rescue Plan Act grant from the federal government.

Meanwhile, as COVID shutdowns ravaged hospital budgets, Community’s subsidiary was engaged in the kickback scheme in exchange for referrals to its electronic health record service and billing those gifts to the hospital, according to a settlement agreement between the hospital and the U.S. Department of Justice.

Last month, Community agreed to pay $31.5 million to settle the claims from a whistleblower who, in 2019, discovered expensive bottles of wine at the headquarters of Community subsidiary Physician Network Advantage following a fire, according to the whistleblower complaint.

In a statement to GV Wire, Michelle Von Tersch, senior vice president and chief of staff at Community, said that all of the ARPA funding went to buy ICU beds and acquire CT scanner equipment.

“Since the news of our settlement with the U.S. Department of Justice was announced, Community Health System has been clear that we recognize the unique responsibility we have as a non-profit healthcare provider to use our assets with integrity and for the benefit of our patients and local residents,” Tersch said. “The funding recently approved by the Fresno County Board of Supervisors was part of and concludes a multi-year process that supported Community’s response to the COVID-19 pandemic.”

Taxpayers Reimbursed ‘Millions of Dollars of False Claims’ to CHS

Fresno County supervisors on Tuesday reviewed the agreement with Community Hospital for nominal cost changes. The hospital reported a $444,453 cost savings for the CT scanner and a $436,617 cost overrun for the installation — resulting in a savings of about $7,800.

As early as 2011, Community began giving out cash, expensive wine, cigars, trips to strip clubs, and trips on private planes to Fresno-area physicians in exchange for them using the hospital’s health record system and for referrals to the hospital, federal prosecutors said.

Those gifts were expensed to the hospital and as a result, the the federal government reimbursed Community for “millions of dollars of false claims,” according to the whistleblower complaint.

The complaint named the hospital system, former hospital CEO Craig Castro, Physician Network Advantage, and its sole shareholder, Christopher Roggenstein. It also named Central California Faculty Medical Group and Sante Health System.

In November 2024, Castro announced he would retire from the hospital system. In December, Community announced that the CEO of its downtown branch, Craig Wagoner, was the new system president and CEO.

Employee Ethics Training Now Includes Anti-Kickback Questions

Employee compliance training at Community Regional now includes training on the federal government’s Anti-Kickback Statute and the Stark Law. Images acquired by GV Wire show ethics questions about what constitutes a “kickback.”

The first question asks what kind of violation it is when a hospital gives a provider free concert tickets in return for referring patients to its facility.

Questions also tell employees to report ethics violations.