Adventist Health System Admits Violations of U.S. Federal Law

by Monte Sahlin

By Adventist Today News Team, May 29, 2014

Adventist Health System (AHS), the nonprofit health ministry affiliated with the Seventh-day Adventist denomination in the United States, has admitted its financial arrangements with some physicians violated the Stark Law. The organization "is engaged in discussions and is fully cooperating with the [Federal] Department of Justice," a financial report states.

AHS operates hospitals in 44 locations across the southern and mid-western U.S., seven of them in central Florida. It is one of the largest nonprofit health care providers in the country.

The Stark Law prohibits agreements under which hospitals compensate physicians for referring patients for tests and procedures. The reason this is illegal is because it might tempt doctors to prescribe unneeded treatments that would both cause unnecessary cost to government programs like Medicare and health insurance plans and place patients at risk.

"Everything we are able to say about this is in our … statement," Kevin Edgerton, an AHS vice president, told the Orlando Sentinel. The newspaper reported that AHS "did not disclose the amount of improper payments, nor the fines it expects to pay [but] the report implied that management had a number in mind which the system could afford." The AHS statement also noted that "assurance cannot be given that the resolution of these matters will not affect the financial condition or operations of the system."

"As the Federal government aggressively prosecutes health care fraud, more providers are making voluntary disclosures to avoid getting slapped with a large penalty," The Daytona Beach News-Journal quoted Jack Mayer, a health economist with Health Management Associates, a consulting and research firm that advised the newspaper and is not affiliated with AHS. The newspaper also cited two examples of other hospitals involved in similar situations.

Tuomey Healthcare System in South Carolina was ordered by a judge to pay $237 million in fines last fall in a case which has received a lot of attention among health care organizations across the country. Halifax Health, a public hospital in Florida, spent more than $22 million in legal fees since a whistleblower lawsuit was filed against it in 2009 and agreed earlier this year to pay $85 million in fines.

"Part of what is going on with this kind of thing is the convulsive change that is taking place in the American health care system," a retired nonprofit executive told Adventist Today. "The Federal government is pushing very hard to try to reduce the overall cost of health care in the nation. Because the Adventist denomination is a big player in health, it is probably impossible to avoid getting caught up in this."