North Carolina whistleblowers cause $118.7M settlement

“Gloria Pryor was a compliance officer for physician offices at Park Ridge”. The case involves whistle-blowers, allegations of government fraud and illegal kickbacks to doctors.

Chatfield said the three whistleblowers “were longtime employees at Adventist’s Park Ridge Health in Hendersonville, NC, where they became aware of the alleged system-wide kickback scheme”. Officials there did not respond to a request for an interview or written response. “The hospitals were willing to pay doctors more compensation than considered fair market value and absorb persistent losses in those deals because of the revenue the doctors’ stream of referrals generated for Adventist from government healthcare programs and elsewhere”. Stark prohibits physician referrals for designated health services for Medicare and Medicaid patients to entities with which the physician has a financial relationship.

The complaints allege that Adventist initiated a corporate policy that directed its hospitals to purchase physician practices and group practices or employ physicians in their surrounding areas in order to control all patient referrals in those locations.

The two Adventist hospitals in Georgia are Gordon Hospital in Calhoun and Murray Medical Center in Chatsworth.

Some of the losses by physicians in their practices were so high that they triggered giveback clauses, the complaint said.

The hospital’s practice of channeling Medicare “Part A” payments to doctors concerned CFO Karsten Randolph to the point that he confided in Church that he was “worried about going to jail”, the lawsuit said. Michael Payne was a risk manager and Melissa Church was the executive director of physician services at Park Ridge.

He had been employed by Park Ridge Health for more than nine years at the time of the complaint’s filing. One of the most powerful tools in this effort is the False Claims Act, according to the release.

By the fall of 2012, the geriatrics unit collapsed under the weight of the fraud, the complaint asserted. A clear violation of what’s known as the Stark act, says U.S. Attorney Rose. And other doctors, nurses and medical staff earned hefty bonuses, not for the quality of their care but quantity of patients seen and volume of tests ordered.

A large portion of the settlement amount – $47 million – is based on allegations involving Florida Hospital Medical Group, which is owned by Adventist, and almost three dozen Florida Hospitals in the state. The amount of the whistleblowers’ rewards in this case hasn’t been determined yet.

“This tactic was intended to increase the number of Medicare, Medicaid and other patients sent to Adventist hospitals for inpatient and outpatient treatment and boost the hospital’s revenues”, Chatfield said.

The settlement resolves Adventist violated the measure by maintaining improper compensation arrangements with referring physicians and miscoding claims.

The Justice Department said the claims settled by the agreement are allegations only and there has been no determination of liability. Both sides agreed that the settlement would enable all parties to avoid the “delay, uncertainty, inconvenience and expense” of protracted litigation.

“Unlawful financial arrangements between heath care providers and their referral sources raise concerns about physician independence and objectivity”, Benjamin Mizer, head of the U.S. Justice Department’s Civil Division, said in a statement. The hospital chain will pay another $3.7 million to four states: Florida, North Carolina, Tennessee and Texas. “Under the False Claims Act … this constitutes a knowing and improper avoidance of an obligation to transmit money to the government”. “The settlement 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”.