$31M Fine for Hospital System That Gave Referring Docs Strip Club Trips & Lavish Perks

Community Health System (CHS), which runs Community Regional Medical Center and Clovis Community Medical Center in Fresno County, is under fire after agreeing to a $31.5 million settlement with the U.S. Department of Justice (DOJ). Along with its affiliate, Physician Network Advantage Inc. (PNA), CHS was accused of handing out fancy perks to win doctors' referrals—something that crosses big legal and ethical lines in healthcare.

“We cannot allow medical decisions to be distorted by kickback schemes or efforts to buy physicians’ loyalty with lucrative side perks,” said Acting U.S. Attorney Michele Beckwith.

Beyond Free Meals: Strip Clubs, Paris, and Luxury Wine

This isn’t just about a free lunch. The allegations paint a much more extravagant picture. According to the DOJ and whistleblower reports, CHS and PNA spent big money—trips, gifts, luxury events—all to get doctors and executives to keep patients flowing into their facilities.

Some jaw-dropping examples of the kickback allegations include:

• A $63,000 family trip to Paris for former CHS CEO Craig Castro in 2014.
• Strip club visits and high-end meals paid for by PNA during a 2016 Las Vegas medical conference.
• A $9,400 Spain trip for Santé Health President Scott Wells and Joyce Fields-Keene, CEO of CCFMG.
• A $20,200 wine country trip to Napa Valley for Castro and Jason Liao.
• $53,400 in luxury wine purchased for a Community Medical Centers fundraiser.
• Even a $4,000 donation to a California state senator’s campaign fund at the hospital system’s request.

HQ2: A Lounge That Looked More Like a Country Club

PNA spent around $1.1 million to renovate its headquarters and build a private retreat called HQ2. This wasn’t your average conference room. HQ2 came with table service, premium liquor, cigars, and gourmet meals—a place designed to wine and dine referring doctors. Amenities were reportedly worth up to $1.2 million.

HQ2 wasn’t the end goal either. The companies had plans for “HQ Ranch,” a bigger retreat featuring a skeet shooting range, off-road vehicle course, and a larger lounge. It’s unclear whether that was ever completed.

Alleged Perks for Execs’ Families Too

PNA also allegedly hired the children of Community executives—a practice that raised serious red flags about nepotism and misuse of funds.

And while these perks flowed to select insiders, nurses, techs, and front-line staff were still pushing through double shifts and tight resources, trying to keep patient care on track.

Who Blew the Whistle?

These allegations came from Michael Terpening, a former PNA controller, who filed the complaint under the False Claims Act’s qui tam (whistleblower) rules. For helping uncover the wrongdoing, Terpening will receive about $5 million from the settlement.

“Kickback arrangements aimed at improperly influencing medical decisions will remain a top investigative priority for our agency,” said Robb R. Breeden, Acting Special Agent in Charge at the U.S. Department of Health and Human Services.

So What Now?

CHS and PNA haven’t admitted they did anything wrong—but they did agree to a five-year Corporate Integrity Agreement. That means the feds will be watching closely. CHS will have to follow strict rules, track financial relationships better, and undergo regular independent audits.

The Bottom Line

Healthcare decisions should always be about what’s best for the patient—not who’s footing the bill for a Vegas trip. Nurses know that. And thanks to whistleblowers like Terpening, shady practices like these are being brought into the light.

🤔 Nurses, share your thoughts in the discussion forum below.