Fresno hospital kickback scheme included these lavish gifts and nepotism hires

Trips to Paris, Napa Valley and Las Vegas were among extravagant gifts and perks provided to Fresno physician group leaders and executives as part of an elaborate patient referral kickback scheme, according to a whistleblower lawsuit.

Last week, the U.S. Attorney’s Office announced that Community Health System (CHS) and healthcare technology affiliate Physician Network Advantage Inc. (PNA) agreed to pay a $31 million fine to settle allegations that they violated the False Claim Act.

An unsealed whistleblower lawsuit filed by former PNA Controller Michael Terpening detailed how the alleged scheme carried out and listed more than a dozen gifts and donations provided to medical leaders. (Terpening and his attorney could not be reached for comment.)

The complaint alleges that PNA provided lavish benefits to doctors and physician group executives in exchange for enrolling in electronic health record system known as “Epic EHR,” The lawsuit also alleges physicians and medical groups who joined the network made fraudulent referrals to CMC facilities in violation of the Anti-Kickback Statute.

Community Health System (CHS), Fresno’s largest healthcare group, owns downtown Fresno’s Community Regional Medical Center and the Clovis Community Medical Center, as well as a health plan and physician network. Community Medical Centers (CMC), is the name of the group that includes the hospitals and clinics under the CHS umbrella.

PNA is a health care technology business founded and funded by CMC to support Fresno-area physicians’ adoption of the electronic health records platform used by Community, according to federal prosecutors. PNA’s CEO Chris Roggenstein is a “longtime friend” of former CHS CEO Craig Castro, according to the lawsuit.

Using money from CMC, PNA built an exclusive wine and cigar lounge known as “HQ2”, complete with private humidor lockers for cigar storage, a state-of-the-art smoke ventilation system, and luxury wines and liquors valued at about $1 million.

“The whistleblower lawsuit makes claims regarding personal choices that don’t reflect our high standards as a non-profit health system, or the values of our current leadership team and board. And a number of elements in the 2019 lawsuit reflect either inaccurate or incomplete information,” said Michelle Von Tersch, senior vice president and chief of staff for CHS.

CHS Board Chair Roger Sturdevant responded to the settlement in a statement to The Bee. “Our current Board and leadership team recognize that we are accountable to assuring compliance that is consistent with regulatory requirements and our own high standards. We have cooperated with the U.S. Attorneys’ Office in its review,” Sturdevant said. “Based on both our own internal assessment and external findings, we have identified and addressed areas for improvement.”

In a statement, PNA said it cooperated with the Civil Division of the U.S. Attorney’s Office in Sacramento in its review of Community Health System’s electronic medical records program that began nearly 15 years ago. “The settlement brings this matter to a conclusion without any determination or admission of legal liability for PNA,” the statement said.

Examples of lavish gifts included in whistleblower lawsuit

In addition to access to “HQ2” for Epic EHR Network Physicians — which included table service and free access to wine, liquor and food — several healthcare executives received trips, donations and expensive Christmas gifts,according to the whistleblower complaint. According to the settlement agreement, 35 unnamed healthcare providers also received reward payments under the guise of “grants.”

The whistleblower complaint lists at least 17 gifts and perks:

1. In September 2014, PNA paid for a trip to Paris, France for Craig Castro and his family, totaling approximately $63,000.
2. PNA rented a private plane for former CMC CEO and defendant Timothy Joslin to travel to Las Vegas.
3. In January 2016, PNA paid for strip clubs and meals for CMC executives and physicians during a medical conference in Las Vegas.
   
   
4. In January 2016, PNA paid for a trip to New York for Jason Liao, an accountant with no official relationship to PNA, totaling $50,000.
5. In February 2016, PNA paid for a trip to Spain for Scott Wells, president of Santé Health and Santé Foundation, and Joyce Fields-Keene, CEO of Central California faculty medical group, totaling $9,400.
6. In May 2016, PNA made a donation to Santé Foundation through Pacific Auction Co., totaling $16,617.20.
7. In June 2016, PNA paid for a trip to Napa Valley for Castro and Liao, totaling $20,200.
8. In June 2016, PNA purchased hundreds of bottles of luxury wine for a CMC foundation fundraiser event, totaling $53,400.
9. In September 2016, PNA paid for a trip to Beverly Hills for Dr. Michael Synn, totaling $6,700. Synn, a defendant in the lawsuit, is a director of the Women’s Specialty & Fertility Center and former member of CMC’s board of trustees.
10. In November 2016, PNA paid for a trip to Nashville, Tennessee for CMC employees, totaling $9,300.
11. In November 2016, PNA paid for a trip to Las Vegas for Liao, totaling $3,300.
12. In December 2016 PNA purchased Christmas gift gifts for Joslin and Patrick Rafferty, former COO of CMC and a defendant in lawsuit, totaling $5,500.
    
    
13. In December 2016, PNA purchased another trip to Las Vegas for Liao, totaling $9,200.
14. In December 2016, PNA made a donation to CMC’s foundation of $10,000.
15. In 2017, PNA purchased a trip to New York City as a door prize for a CMC foundation fundraiser, totaling more than $30,000.
16. In June 2017, Roggenstein directed PNA to contribute $4,000 to a campaign fund for Senate candidate Andres Borgeas at CMC’s request.
17. In July 2017, Roggenstein purchased Christmas gifts for Castro and Joslin totaling $4,270.94. These gifts were expensed through PNA.

Jobs for relatives

According to the lawsuit PNA employed EHR Network Physicians and family members of CMC executives “for little or no legitimate purpose.”

According to the suit, Dr. Michael Maruyama, also a defendant in the complaint, was hired by PNA in January 2015 as a “Physician Advisor” after he suffered a medical condition and was no longer able to perform on-call duties at CMC hospitals. He received an annual salary of $185,000.

The complaint said that “at no time did Dr. Maruyama perform any meaningful work.”

PNA also employed the following people for participating in the CMC Epic EHR Network, at the request of CMC:

• The son of Castro, former CEO of CHS and defendant in the lawsuit.
• The son of Grant Nakamura, a defendant in the lawsuit.
• The son of Dr. Ajit Arora, managing physician of Fresno Gastroenterology and former CMC Board member.
• The son of Rafferty.

This story was originally published May 19, 2025 at 2:13 PM.

Melissa Montalvo

The Fresno Bee

559-212-4425

Melissa Montalvo is The Fresno Bee’s accountability reporter. Prior to this role, she covered Latino communities for The Fresno Bee as the part of the Central Valley News Collaborative. She also reported on labor, economy and poverty through newsroom partnerships between The Fresno Bee, Fresnoland and CalMatters as a Report for America Corps member.