Consumer Fraud

The Fraud List: Adventist Health System demonstrates a history of health care fraud

the fraud list 370x210 The Fraud List: Adventist Health System demonstrates a history of health care fraudAdventist Health System is a non-profit health care organization run by the Seventh-day Adventist Church. The Altamonte Springs, Fla.-based organization network encompasses about 45 hospital campuses in 10 Southern and Midwestern states in addition to a number of urgent care centers, home health care and hospice centers, and nursing homes, making it the largest Protestant-affiliated non-profit health care provider in the U.S.

Adventist Health says its organization “incorporates Christian values at every level of service” and conducts its business “with integrity, honesty and fairness,” yet somehow these values have led it into numerous multimillion-dollar settlements to resolve allegations of fraud, most of which originated from legal action taken by whistleblowers under the federal False Claims Act.

Earlier this year, Adventist Health agreed to pay the U.S. more than $5.4 million to close a case stemming from a Florida oncologist who alleged that several Adventist hospitals in Florida were providing radiation oncology services to Medicare and TRICARE (the Defense Department’s health care program) beneficiaries that weren’t directly performed or supervised by radiation oncologists or other qualified professionals, as required by law.

Dr. Michael Montejo filed a lawsuit against Adventist Health under the whistleblower provisions of the False Claims Act, claiming that from 2010 through 2013, seven Adventist hospitals in Florida billed Medicare and TRICARE for services that did not meet accepted medical standards or comply with federal law. U.S. prosecutors asserted the alleged practices amounted to “recklessly cutting corners” on critical services for cancer patients.

Adventist settled the whistleblower complaint in March, and Dr. Montejo received a $1 million share of the recovery for his role.

In January 2014, Adventist Health settled a False Claims Act lawsuit filed in 2010 by whistleblowers Amanda Dittman, a bill-coding and reimbursement compliance officer for Adventist, and Dr. Charlotte Elenberger, a radiologist at an Adventist Health-affiliated hospital.

The amount of the settlement was undisclosed, but an attorney for one of the whistleblowers told the Orlando Sentinel that Adventist faced paying up to $100 million for billing fraud that allegedly occurred between 1995 and 2009.

The whistleblowers alleged that seven Adventist hospitals in Florida engaged in rampant overbilling of Medicare, Medicaid, and TRICARE, carried out by routinely using billing-code modifiers that inflated the cost of services and caused the taxpayer-funded health care programs to overpay for more than a decade.

The whistleblowers also alleged that the hospitals submitted bills to the government health care programs for drug dosages that were larger than the ones actually administered and filed claims for reimbursement for services that the hospitals never even performed.

Adventist Health asked the federal judge hearing the case to dismiss it for insufficient evidence. The judge denied the request, saying the complaint “satisfies the [False Claim Act] requirements of describing the alleged fraudulent acts, why they were fraudulent, when they occurred, and who engaged in them.” He set the trial to start in December 2013 and the case was settled soon after.

In May 2013, Adventist Health agreed to pay $14.1 million to settle another False Claims Act lawsuit filed by whistleblowers who claimed the organization’s Western division and an affiliated teaching hospital in Los Angeles engaged in an illegal kickback scheme to boost patient referrals.

According to the complaint, Adventist’s White Memorial Medical Center improperly paid Family Care Specialists more than the fair market value for teaching services performed for the hospital’s family practice residency program. The complaint also alleged that White Memorial improperly compensated physicians for referring patients to the hospital by transferring assets, including medical and non-medical supplies and inventory, to the physicians at less than fair market value.

The U.S. government backed the whistleblower complaint, alleging these arrangements and payments violated the Anti-Kickback Act and Stark Statute, and by extension, the False Claims Act. Approximately $11.5 million of the settlement went to the U.S. government, and most of that was deposited into the Medicare Trust Fund. California’s Department of Health Care Services received the remaining $2.6 million.

The agreement also required White Memorial to enter into a comprehensive five-year Corporate Integrity Agreement overseen by the U.S. Department of Health and Human Services’ Office of Inspector General. The program required the hospital to take a series of measures to ensure its compliance with the law.

The whistleblowers who filed the original complaint in a federal court in Sacramento shared an award of more than $2.8 million for exposing the illegal kickback scheme.

In February 2012, four Adventist Health System hospitals in Florida and 10 other non-Adventist hospitals agreed to pay the U.S, more than $12 million to settle formal allegations made by a pair of whistleblowers that the health care facilities were subjecting patients to unnecessary inpatient procedures instead of treating them as outpatients.

The allegations centered on a minimally invasive procedure known as kyphoplasty, which is performed to treat certain spinal fractures usually brought about by osteoporosis. In most cases, kyphoplasty can be safely performed on an outpatient basis at a substantially lower cost. The U.S. backed the whistleblower complaint claiming that Adventist and the other hospitals performed the procedures on an inpatient basis so that they could bill Medicare more.

“Patients want reassurance that their health care provider is making treatment decisions based on the patient’s best interests, not an interest in maximizing profits,” Assistant U.S. Attorney General Tony West said. “By recovering taxpayer dollars lost to improper billing, this settlement will help support the vital public health care programs we depend on.”

The U.S. Justice Department’s settlement with the 14 hospitals followed a 2008 agreement reached between the U.S. and Medtronic Spine LLC in a case involving kyphoplasty and Medicare fraud. Medtronic, the corporate successor to Kyphon Inc., paid the U.S. $75 million to settle allegations that it defrauded Medicare by counseling hospitals to perform kyphoplasty procedures as inpatient procedures. That settlement was the largest of Medtronic’s numerous False Claims Act settlements.

Some Adventist Health System hospitals boosted their bottom line by charging Medicare for medically unnecessary ambulance services. In October 2004, Adventist, three of its Florida hospitals, and a management company that administered ambulance services at the three hospitals, paid the U.S. $20.3 million to settle a False Claims Act suit brought by two whistleblowers.

The complaint alleged that the hospitals used ambulances to transport patients unnecessarily and billed Medicare for the transportation. They also claimed that the ambulance dispatcher, Regional Emergency Services, and the hospitals created false physician certifications regarding the medical necessity of the ambulance transports, which resulted in the submission of false claims to Medicare.

The whistleblowers alleged that the unlawful activity occurred from 1993 through 2000, causing Medicare to pay participants in the scheme millions of dollars in taxpayer funds that should have gone to seniors who truly needed them.

Adventist and three of its affiliated hospitals settled a similar case in December 2000, paying $8.7 million to resolve a whistleblower’s allegations that they operated with “fraud and abuse” by inflating fees for ambulance services in the cost reports they submitted to Medicare.

The lawsuit, filed by a former internal audit director at an Adventist affiliate, alleged that the falsified cost reports caused the federal government to pay Adventist and the three Florida hospitals more than it should have for ambulance services.

Coming Up Next:

This was the final installment of The Fraud List. The 13-week series profiled repeat offender of the False Claims Act. Look for #thefraudlist on Google+, Facebook and Twitter to find any stories you might have missed. We will begin another series the week of Sept. 6, for Labor Day, examining issues surrounding the Fair Labor Standards Act (FLSA) including wage and hour law, overtime pay, and other topics.

Sources:

U.S. Department of Justice: Adventist Health System to Pay $5.4 Million to Resolve False Claims Act Allegations

U.S. Department of Justice: Adventist Health Pays United States and State of California $14.1 Million to Resolve False Claims Act Allegations

U.S. Department of Justice: Fourteen Hospitals to Pay U.S. More Than $12 Million to Resolve False Claims Act Allegations Related to Kyphoplasty

U.S. Department of Justice: ADVENTIST HEALTH SYSTEM, HOSPITALS, AMBULANCE COMPANIES TO PAY U.S. MORE THAN $20 MILLION TO SETTLE FRAUD CLAIMS

U.S. Department of Justice: ADVENTIST HEALTH SYSTEM, HOSPITALS, AMBULANCE COMPANIES TO PAY U.S. MORE THAN $20 MILLION TO SETTLE FRAUD CLAIMS

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