Adventist Health System Agrees to Record Settlement in Whistleblower Lawsuit

Altamonte Springs, Florida-based Adventist Health System will pay nearly $119 million to settle a 2013 lawsuit brought by three whistleblowers, all former employees of Park Ridge Health in Henderson, North Carolina. The settlement nearly doubles a previous U.S. record settlement of $69.5 million, paid just last week by Broward Health, whose headquarters are in Fort Lauderdale, Florida, in a "scheme of mutual enrichment" between Broward and its physicians.

Adventist Health System said in a statement Monday,

Adventist Health System regrets these oversights, and while some of its hospitals had no violations, the organization has improved monitoring and business practices system-wide as a result of lessons learned from this experience so that it can continue to uphold the highest standards of compliance with regulations.

The statement also noted that, according to its own internal investigation, there were no negative effects on patient costs or safety, and no impact on quality as a result of the infractions.

In the Adventist Health System suit, the United States Department of Justice contended that AHS paid improper bonuses to its physicians for referring patients to AHS hospitals in Florida, North Carolina, Tennessee and Texas and submitted false claims to the Medicare and Medicaid programs for services rendered by the physicians who received the improper bonuses. AHS also used improper coding modifiers to bill Medicare, the DOJ contended. The health system's actions constituted violations of the Stark Law and the False Claims Act, according to the lawsuit.

The payout amounts to the largest healthcare fraud settlement ever made involving physician referrals to hospitals. However, there was no determination of liability in the case.

A report in Modern Healthcare revealed that the Adventist Health System settlement is the third and most costly of three similar cases involving the Stark Law in the month of September. On the 4th, Columbus Regional Health in Georgia paid $35 million to settle a suit alleging improper billing. Broward Health's settlement, which may also bring criminal charges, came on September 15. On the 22nd, Adventist Health System settled its case.

Revelations by three Park Ridge Health employees—Melissa Church (executive director of physician services), Michael Payne (who worked in risk management), and Gloria Pryor (compliance officer for physician offices) —led to the suit against AHS. In addition to disclosures of improper billing and payments for referrals, they revealed that the health system leased a BMW and Mustang for a surgeon, and paid a bonus of nearly $368,000 plus salary for total annual pay of $710,000 for a dermatologist who worked just three days a week.

Adventist Health System says the payment "fully resolves issues AHS voluntarily disclosed to the United States government in early 2013 involving its implementation of certain physician employment compensation models and highly technical physician billing and coding issues."

According to the Modern Healthcare systems financial database, AHS had an operating revenue of almost $8.4 billion in 2014. With 45 hospital campuses with nearly 8,300 licensed beds in 10 states, it is one of the largest health systems in the United States.

 

Jared Wright is Managing Editor of SpectrumMagazine.org.

 

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