Government Hit With Sanctions For “Apathetic Conduct”

In a ruling meant in part to keep the government from benefitting from its “apathetic conduct”, a New Mexico federal judge upheld a magistrate judge’s recommendation for sanctions against the government for failing to safeguard documents that may have aided Community Health Systems (CHS) in defending against a whistleblowers Medicaid claim. The magistrate judge determined that the government had waited too long to institute a litigation hold letter that may have kept vital electronic records relevant to the case from being destroyed. Though the government did not intervene in the whistleblower’s claim until 2009, they had been investigating the claims since 2005. Despite that, the government failed to initiate the litigation hold until they intervened in 2009.

The underlying whistleblower claim, brought by Robert C. Baker, alleges that CHS presented fraudulent claims for federal matching Medicaid funds. The suit alleges CHS made donations from local hospitals to the county government in which the hospital resides. The county government subsequently helped fund the state’s portion of the Medicaid reimbursement payments.  CHS subsequently tricked the government into matching those donations by falsely stating that the donations were not related to Medicaid.