Owner of Deaconess, Valley hospitals says it will contest lawsuit over charity care spending

The owner of Deaconess and Valley hospitals said it will “vigorously contest” a lawsuit alleging it shortchanged local charity care spending by up to $110 million.

Community Health Systems bought both hospitals in 2008. The Tennessee hospital corporation agreed to meet or exceed the average level of hospital charity care spending in Eastern Washington as part of the purchase agreement, the lawsuit said.

Both hospitals have fulfilled their commitment, which required CHS to exceed historic levels of charity care at the two institutions, said Tomi Galin, CHS’ senior vice president for corporate communications and marketing. Under state law, the hospitals only had to make “reasonable efforts” to meet Eastern Washington averages for charity care, she said.

The hospitals’ charity care policies are “more expansive and generous” than they were under Empire Health Services, the hospitals’ previous owner, Galin said.

Both the hospitals’ charity care spending and number of individuals served grew under CHS’ ownership, she said. Charity care was expanded to cover a greater percentage of costs for households earning up to 300 percent of the federal poverty level, Galin said. The hospitals also doubled the number of staff working with charity care patients, she said.

The suit against CHS was filed Monday in U.S. District Court in Spokane by Empire Health Foundation, a local nonprofit. The foundation was formed with proceeds from the sale of Empire Health to CHS.

The lawsuit alleges that CHS’ charity care spending fell at least $55 million short of levels promised in the sales contract through 2015. The suit also accuses CHS of inflating the value of the charity care it did provide, which could put the shortfall as high as $110 million.

Community Health Systems is in the process of selling both hospitals to MultiCare Health System of Tacoma, a nonprofit. The deal is expected to close June 30.