10 May 2018 | According to court documents, Karsten Randolph, the current interim Chief Executive Officer of Shawnee Mission Health, was afraid he would face incarceration for an alleged kickback scheme run at his former hospital.

The Kansas City Star reported that the suspected unlawful activity involved 20 Adventist Health System hospitals including Park Ridge Health in North Carolina where Randolph was Chief Financial Officer when a lawsuit was filed against AHS by whistleblowers and federal investigators. The hospitals were accused of paying doctors inflated salaries and bonuses in exchange for patient referrals for expensive tests and procedures at AHS facilities.

Federal officials claimed that the alleged scheme undermined patient care and wasted resources. The government also claimed the scheme violated a federal anti-kickback statute as well as the Medicare/Medicaid false claims act and the Stark Statute, a law that handles physician referrals. Adventist Health System settled the suit for $118.7 million in September 2015. At the time the settlement set a new record high for its kind of lawsuit.

According to the Kansas City Star, Randolph was later transferred within AHS from Park Ridge Health to Shawnee Mission Health (which is four times larger than Park Ridge Health) where he started as CFO and has now been promoted to interim CEO until the new CEO arrives on May 26.

“It shouldn’t be the kind of thing that’s happening, but in reality, that’s what happens a fair amount,” said Peter Chatfield, an attorney who represented the whistleblowers while commenting on executives, allegedly implicated by the kickback scheme, that nevertheless rise in seniority within the system.

“At the end of the day, once the noise and the outrage that some of the Adventist community had about not wanting to be associated with people who act this way, once that sort of fades away, they have these experienced execs who know how the company works and in fact made more money for the company with what they did than they ended up paying to the government.”

AHS defended Randolph in comments to the Kansas City Star, saying that he had contributed significantly to reforms that had been instituted after the settlement. Melanie Lawhorn, a spokeswoman at the AHS corporate office called Randolph “a man of integrity and an extremely valued leader within Adventist Health System. Our organization believes he has and will continue to have a tremendous and positive impact on Shawnee Mission Health.”

The newspaper states that court documents show Randolph was aware that AHS was running an illegal scheme but neglected to report it to the federal government because the money that would need to be paid back would be “insane.” The lawsuit claims Randolph asked employees to cover the scheme up and “lose” internal documents.

One of these employees who later became a whistleblower was Melissa Church, the executive director of physician services for Park Ridge Health. Church claimed that Randolph told her a number of times that he was concerned about the possibility of jail time because of the excessive physician compensation.

Adventist Health System operates 46 hospitals within the Southern and Midwestern regions of the United States. Its headquarters is in Altamonte Springs, Florida. It is affiliated with the Adventist Church. According to the Kansas City Star, the system was generating revenue of approximately $6 billion to $7 billion in the last years of the physician referral scheme. Court documents say the scheme started in the late 1990s.

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