On May 3, 2013, Adventist Health and its affiliated hospital White Memorial Medical Center agreed to pay $14.1 million to the federal government and the State of California to settle a lawsuit alleging that it violated the federal and California False Claims Acts (FCA) by improperly compensating physicians who referred patients to the White Memorial facility. In addition, White Memorial agreed to enter into a comprehensive five-year Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services to ensure compliance with federal health care benefit programs.
The settlement resolves a lawsuit filed in 2008 by two physicians formerly employed by defendant White Memorial Medical Center. The lawsuit, captioned U.S. ex rel. Hector Luque et al. v. Adventist Health et al., No. 2:08 CV1272 (E.D. Cal.), alleged that defendants’ improper financial relationships with referring physicians violated federal and California state laws that prohibit payments for referrals and kickbacks, and by extension the federal and California FCAs. According to the complaint, “[t]hose financial relationships took various forms over time, ranging from ownership of medical practice groups through a sham foundation, to cash payments disguised as teaching stipends, to recruitment loans and lines of credit to physicians that were not required to be paid back.”
The federal government intervened on May 1, 2013, and Adventist Health settled two days later. Adventist Health will pay $11,500,000.00 to the federal government and $2,600,000.00 to the State of California. The Department of Justice’s press release describing the settlement can be found here (http://www.justice.gov/opa/pr/2013/May/13-civ-507.html).