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Whistleblowers Expose Record-Setting Physician Referral Fraud Case

In a record-breaking settlement, Adventist Health System must pay over $118 million to settle a 2012 whistleblower lawsuit. The large settlement is a result of Adventist’s alleged over-compensation to physicians for referring patients to Adventist-owned health care facilities in Texas, Tennessee, Florida, and North Carolina. The settlement, which is the largest of its kind involving doctor referrals to hospitals, will be distributed among those four states, and the federal government.
The lawsuit alleges that Adventist directed its hospitals to employ physicians within their local service areas and to purchase private practices in order to create a patient referral monopoly in those areas. In fact, many of the doctors at one of the Adventist-owned physician practices, Florida Hospital Medical Group, also worked at several Adventist hospitals and outpatient clinics.

Federal False Claims Act

The whistleblowers credited with exposing this record-breaking fraud, three former hospital employees, will be awarded handsomely for their efforts. The False Claims Act encourages individuals to  file “qui tam” lawsuits if they become aware of any fraudulent activity against the government. Whistleblowers are typically rewarded up to 25 percent of the financial recovery if the government gets involved.

All three whistleblowers were long-term employees at Adventist’s Park Ridge Health in North Carolina. After several years of attempting to use internal channels to have their concerns addressed, Michael Payne, Melissa Church, and Gloria Pryor filed a whistleblower lawsuit in 2012, after realizing management wasn’t going to do anything to stop the fraudulent activity.

The lawsuit alleges that excessive compensation for physician referrals was apparent in several instances, including:

A bonus of over $367,000 for a dermatologist who worked part time. This brought his total pay for the year to $710,000, in addition to extra payments for staff, equipment, and malpractice insurance.

  •  A family physician’s $366,000 base salary – nearly double the salary of other physicians in the same area.
  • A BMW and Mustang lease for a surgeon

The $118 million settlement is almost double the previous largest settlement for alleged hospital kickbacks, which was a $69.5 million settlement by Florida’s North Broward Hospital District. In addition to the physician-referral scheme, the settlement also covered several allegations of Medicare billing fraud, which included “unbundling” Medicare services in order to submit them as separate claims.

Altman & Altman, LLP – Boston’s Whistleblower Law Firm

If you are aware of any type of fraudulent activity against the government, the Federal False Claims Act encourages private citizens to expose the fraud by filing a whistleblower lawsuit. If your unique information leads to a settlement, you may be rewarded with up to 25% of the settlement. Considering that whistleblower lawsuits can result in tens of millions of dollars in settlements, the whistleblower’s incentive can be quite substantial. Whistleblowers are extremely valuable to the safety and welfare of the general public. Fraudulent activity can lead to inadequate healthcare, dangerous pharmaceuticals, malfunctioning motor vehicles, and countless other health and safety hazards. At Altman & Altman, LLP, we encourage individuals with information about fraudulent activity to come forward. With nearly 50 years of experience in this area of law, we can help you determine the best strategy for moving forward. Call Altman & Altman, LLP today for a free consultation about your case.