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MUSC sues firm it bought rural hospitals from, cites $3.5M in Medicare charges

MUSC's main hospital

MUSC's purchase of four rural hospitals had led to two legal disputes. File/Provided

The Medical University of South Carolina and the company it bought four hospitals from last year are sparring in court over disputed Medicare charges.

MUSC filed a lawsuit against Community Health Systems, a Tennessee-based hospital owner, in U.S. District Court on Monday.

The complaint stems from $3.5 million in Medicare charges owed back to the federal government.

Federal investigators audited Carolinas Hospital in Florence, releasing a report in November that found the hospital overcharged for its services in 2016 and 2017. 

Community Health owned the medical center at the time. MUSC bought the Pee Dee hospital and three others Chester, Lancaster and Mullins from the company in early 2019 for $137 million. 

A federal auditor wrote in a report that Community Health's lack of internal checks and balances that would have caught the errors led to the incorrect billings.

The company has not yet filed a formal response in the case, but Carolinas Hospital has disputed allegations that the charges were erroneous. It has appealed the findings with the U.S. Department of Health and Human Services Office of Inspector General, according to MUSC's lawsuit. 

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But in the meantime, Medicare is withholding $3.5 million from MUSC because of the overpayments. MUSC wants Community Health to pay that money back.

It is the second time the two medical providers have gone to court this year.

Community Health sued MUSC over breach of contract allegations in Tennessee seeking $2.2 million. In short, the company believes MUSC underpaid for the four hospitals.

A spokeswoman for Community Health said MUSC "ignored the pending Tennessee action and filed this second case in South Carolina based on the same transaction."

MUSC has responded to the Tennessee suit. The matter is pending. 

The spokeswoman also said MUSC did not notify Community Health of the audit "in a timely manner."

Reach Mary Katherine Wildeman at 843-607-4312. Follow her on Twitter @mkwildeman.

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