Florida-based Adventist Health System has agreed to pay $115 million to resolve allegations they provided physicians with patient-referral kickbacks in violation of the Stark Statute and False Claims Act. Three former North Carolina Adventist Hospital employees brought the initial qui-tam lawsuit in December 2012 and will share in a total whistleblower cash award of up to 30 percent of the total settlement amount.
Adventist Health System Allegations Include Kickback Schemes and Medicare Overbilling
After several years of attempting to stop referral bonuses and improper billings via internal channels, three former employees of Adventist’s Park Ridge Health in Hendersonville, North Carolina; risk manager Michael Payne, executive director of physician services Melissa Church, and physician’s office compliance officer Gloria Pryor, filed a whistleblower lawsuit alleging a system-wide kickback scheme that paid doctors for referrals in Florida, North Carolina, Tennessee and Texas.
Adventist allegedly enacted a corporate policy to purchase healthcare practices in surrounding areas for the purpose of increasing Medicare and Medicaid beneficiaries brought in for treatment. Under the policy, physicians were required to refer patients to their Adventist hospital employer. As incentive for physician referrals, practices paid doctors excessive benefits, including luxury car leases and base salaries and bonuses totaling up to over $710,000 per practitioner.
In addition to the alleged kickbacks, Adventist allegedly billed government health care programs for more expensive treatments than medically necessary, for services provided by fill-in doctors lacking proper credentials, unbundled services and billed them as separate claims at an overall higher cost and billed for services not documented in patient records.
Kickbacks Encourage Care Protocols Based on Financial Reward, Not Patient Health
The alleged financial arrangements Adventist had with their physicians violate the Stark Statute and the False Claims Act. Federal law prohibits hospitals from paying doctors directly or indirectly for patient referrals. This prohibition is put in place to encourage doctors to recommend care protocols based on the best interests of the patient rather than on financial reward.
Adventist Health Continues Sordid History of Health Care Fraud Charges and Settlements
This settlement becomes the new tail end of a long line of Adventist Health System healthcare fraud allegations and multi-million dollar settlements.
In October 2004, Adventist paid $20.3 million to settle allegations of improper billing for ambulances to transport patients unnecessarily. In February 2012, Adventist was part of a more than $12 million settlement resolving allegations they subjected patients to unnecessary spinal fracture procedures. In May 2013, Adventist Health paid $14.1 million to settle allegations they engaged in illegal kickback schemes and in January 2014, Adventist settled a lawsuit resolving allegations of billing fraud.
Earlier this year, Adventist agreed to pay $5.4 million to settle allegations they provided radiation services to Medicare and TRICARE beneficiaries that weren’t supervised by the required qualified professionals.
Adventist Health $118.7M Settlement Provides Lucrative Cash Whistleblower Reward
From the $118.7 million settlement, $115 million will be paid to the federal government, $3.48 million to the State of Florida, $198,453 to the State of North Carolina, $66,897 to Tennessee and $4,711 to Texas. Under the U.S. False Claims Act, private citizens who file a lawsuit reporting allegations of fraud against the government are entitled to up to 30 percent of the total recovery as a cash whistleblower reward. The reward amount to be shared among the three whistleblowers Michael Payne, Gloria Pryor, and Melissa Church has not yet been released.
Adventist Health stated its own review did not identify any negative impacts on quality, safety or cost of patient care and noted that it has since implemented a centralized process to set physician compensation.
These recent settlements demonstrate the government’s focus on the Stark Statute and the serious nature of kickback allegations. Whistleblowers are becoming more aware of the role they play in bringing fraud to light and the lucrative financial rewards offered to them by the government for their actions.