Adventist Health System, a nonprofit healthcare system operating in 10 states, has agreed to pay $115 million to settle allegations the organization maintained improper compensation arrangements with referring physicians and miscoded claims, thereby violating the False Claims Act. The settlement resolves allegations of submitted false claims to the Medicare and Medicaid programs for patient services referred by employed physicians who received bonuses based on a formula that improperly took into account the value of the referrals to the Adventist hospitals. Federal law restricts financial relationships for doctors referring patients to hospitals and clinics.
The settlement also resolves allegations of improper coding. According to the settlement, Adventist submitted bills containing improper coding modifiers to Medicare for its employed physicians’ professional services, resulting in larger reimbursements for these services than entitled.
Both allegations settled were the result of two lawsuits filed by Adventist employees under the qui tam provisions of the False Claims Act. In 2009, the False Claims Act was amended to include the Fraud Enforcement and Recovery Act. The amendments in part expanded the government’s ability to use civil discovery and devices to file a whistleblower lawsuit by a person acting on behalf of the Federal government. Additional amendments were made in 2010 as part of the Patient Protection and Affordable Care Act.
In the Adventist suit, the two whistleblowers’ share of the settlement has yet to be determined.
In the statement released by the U.S. Department of Justice, the agency made it clear it will continue to investigate violators. “Adventist-owned hospitals, such as Park Ridge, allegedly paid doctors’ bonuses based on the number of test and procedures they ordered,” said Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina. “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.”