Adventist Health System Pays Massive $118 Million False Claims Act Settlement

Adventist Health System is accused of offering inflated salaries and incentives to physicians in exchange for patient referrals.
Image source: Wikimedia Commons

In yet another case of illegal kickbacks and unlawful referrals, Florida-based Adventist Health System has agreed to pay $118 million to the federal government pursuant to several successful whistleblower actions filed by former employees of the corporation.

Adventist is a non-for-profit healthcare corporation that manages facilities in ten states. According to the Department of Justice, its practices included not only illegal kickback schemes, but also the increasingly common practice of upcoding and inflated billing for medical services.[1. Department of Justice Press Release: “Adventist Health System Agrees to Pay $115 Million to Settle False Claims Act Allegations.” September 21, 2015. http://www.justice.gov/opa/pr/adventist-health-system-agrees-pay-115-million-settle-false-claims-act-allegations]

The case got its start when several whistleblowers filed allegations against Adventist in North Carolina. Three of the whistleblowers formerly worked in the hospital, while the fourth was a member of the Adventist corporate team. To date, their share under the False Claims Act’s qui tam provisions has not been determined.

Details of the allegations against Adventist HealthCare

Adventist Health System is the largest not-for-profit, Protestant church-affiliated healthcare provider in the United States. It was founded by the Seventh Day Adventist church in 1973 and maintains 45 hospital campuses across the Southeast and Midwest. The entity is alleged to have created a complex formula designed to offer additional bonuses and compensation to regional physicians based on the number and value of Medicare and Medicaid referrals sent to the Adventist network – a practice which clearly violates the anti-kickback provisions of the False Claims Act and Stark Law.

In addition to the illegal kickbacks, the Department of Justice contends that Adventist used illegal coding modifiers in order to obtain higher reimbursements from Medicare and Medicaid for patient services.[2. Schenker, Lisa, “Adventist Health System to pay $118.7 million settlement over Stark, False Claims allegations.” September 21, 2015. http://www.modernhealthcare.com/article/20150921/NEWS/150929974] A code modifier is an additional code set included with a patient’s bill that reflects an ancillary or added service, but does not alter or change the original code entered. For instance, code modifier “62” can be entered when a procedure requires the use of two surgeons during the same surgical session and code “51” indicates more than one procedure was completed on the same during or during the same operation.[3. “Using modifier 62, two surgeons.” Priory Health. http://www.priorityhealth.com/provider/manual/billing-and-payment/modifiers/62]

Government’s response to the fraud

Benjamin C. Mizer said in a statement on behalf of the Justice Department’s Civil Division, “Unlawful financial arrangements between heathcare providers and their referral sources raise concerns about physician independence and objectivity….Patients are entitled to be sure that the care they receive is based on their actual medical needs rather than the financial interests of their physician.”

The U.S. Attorney’s Office also commented, further extrapolating on the nature of the alleged misconduct: “Adventist-owned hospitals, such as Park Ridge, allegedly paid doctors’ bonuses based on the number of tests and procedures they ordered….This type of financial incentive is not only prohibited by law, but can undermine patients’ medical care. Would-be violators should take notice that my office will use the False Claims Act to prevent and pursue health care providers that threaten the integrity of our healthcare system and waste taxpayer dollars.”

Contact Berger Montague today

If you are aware of healthcare fraud at your place of employment and would like to discuss your findings with a knowledgeable whistleblower attorney, please contact Berger Montague today.