Adventist Health System, a non-profit healthcare organization that operates hospitals and other health care facilities in 10 states, this week agreed to pay $115 million to the government to resolve allegations that it violated the False Claims Act by maintaining improper compensation arrangements with referring physicians and by miscoding claims. 

The settlement resolves allegations that Adventist submitted false claims to the Medicare and Medicaid programs for services rendered to patients referred by employed physicians who received bonuses based on a formula that improperly took into account the value of the physicians’ referrals to Adventist hospitals. Federal law restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them.

The settlement also resolves allegations that Adventist submitted bills to Medicare for its employed physicians’ professional services containing certain improper coding modifiers, and thereby obtained greater reimbursement for these services than entitled.

The allegations arose from two whistleblower lawsuits filed respectively by former Adventist employees Michael Payne, Melissa Church, and Gloria Pryor, who worked at Adventist’s hospital in Hendersonville, North Carolina, and Sherry Dorsey, who worked at Adventist’s corporate office. They filed the lawsuit under the FCA’s whistleblower provisions, which permit individuals who discover fraud to file claims on behalf of the government and to share in any recovery.  The whistleblowers’ share of the settlement has not yet been determined.