California-based Adventist Health System/West d/b/a Adventist Health (“Adventist”) and its affiliated hospital White Memorial Medical Center (“White”) have agreed to settle a False Claims Act case with the U.S. and the state of California. As part of the settlement, Adventist and White agreed to pay $11.5 million to the federal government and $2.6 million to the California Department of Health Care Services.
According to the Justice Department, Adventist and White paid illegal kickbacks to physicians who referred patients to White. The U.S. alleged that the entities paid referring physicians above fair market value to provide teaching services at White’s family practice residency program. In addition, it was alleged that Adventist and/or White transferred assets, including medical and non-medical supplies, to referring physicians at prices below fair market value.
The allegations were first made in a whistleblower lawsuit filed in 2008 under the qui tam provisions of the False Claims Act by two internal-medicine physicians, Hector Luque and Alejandro Gonzalez. According to the Los Angeles Times, the allegations primarily focused on the relationship between White and two physician groups – Family Care Specialists and White Memorial Medical Group.
Under the qui tam provisions of the False Claims Act, the whistleblowers will receive approximately $2.8 million of the settlement proceeds as their reward.