White Memorial Medical Center Agrees to Pay $14.1 Million to Settle Allegations of Illegal Kickbacks to Doctors
by Adventist Today News Team
Last Friday (May 3) the United States Department of Justice announced that Adventist Health System/West, the nonprofit corporation that controls White Memorial Medical Center in Los Angeles, had agreed to pay $14.1 million to avoid going to trial on charges that it violated laws prohibiting payments to doctors to get them to refer their patients to the hospital. The allegations were first filed in 2008 by two doctors who will receive $2.8 million of the total under the "whistleblower" law.
By Monday the story had been picked up by the Los Angeles Times, the Wall Street Journal, The Sacramento Bee and a number of other news publishers in California and across the country. Government authorities "pay close attention to the financial relationships between hospitals and doctors out of concern that patients will receive unnecessary tests and treatments, often at the expense of taxpayer-supported health programs," the Times explained. "White Memorial violated anti-kickback laws by overpaying certain physicians and giving them other improper inducements in return for patient referrals."
Financial arrangements of this kind "cost taxpayer dollars and undermine the integrity of medical judgments," the Los Angeles newspaper quoted United States assistant attorney general Stuart Delery. "White Memorial said it cooperated fully with the government investigators and that the settlement related to financial relationships that were entered into more than a decade ago," the Times also reported.
Out of the total settlement, $11.5 million will go the Federal government and $2.6 million to the California Department of Health Care Services, according to The Sacramento Bee, the major news organ in the state capital. The largest share will go into the Medicare Trust Fund.
The lawsuit alleged that doctors were given inflated payments for teaching at White Memorial which is the location of a number of medical training programs, as well as gifts of equipment and supplies. These payments were charged to be in violation of the Anti-Kickback Act, the Stark Statute and came under the terms of the False Claims Act, which allows individual citizens to sue to recapture funding provided by the government that may have been used by the hospital in illegal arrangements.
The U.S. Justice Department stated that the action was "part of the government's emphasis on combating health care fraud." It also said, "as part of the settlement, White Memorial has entered 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 its continued compliance with federal health care" laws and regulations.
"Clearly this is not a good witness for the Church and is outside the intentions of the Adventist Church for its health ministries," a retired administrator told Adventist Today. "At the same time, it must be kept in mind that these structures and polices are very complex. There may not have been any intention to do something wrong. There is much competition in health care these days, and an inner city hospital like White Memorial is difficult to keep funded."
Adventist Today has recently published extensive data about the high salaries paid some executives in some health care organizations affiliated with the Seventh-day Adventist Church. "This may seem counter-intuitive," the retired administrator said, "but it may be that mistakes were made because we did not pay enough to get someone with greater capability than those who made bad decisions in this case. It would be stupid to assume that the high salaries and the wrong-doing are necessarily cause and effect."
The claim by that retired administrator about the kickbacks being the result of not paying high enough salaries to administrators smells rotten. The root challenge is ethics and a person's ethics won't automatically grow with their salary.
Mr Noel's comments are spot on. In reviewing the 990 for 2011 there were three individuals with remuneration of over $1.0 million. That's not including the oversighting salaries of corporate at Roseville. Surely these "complexities" should have been resolved by these highly skilled executives.
I am ashamed that the hospital has Adventist in its name. We know it is complex to keep all this in check, and they are needed in that part of the city. But let's not look for excuses. That last paragraph is ludicrous. As WM says–does ethics grow with their salary? Who is hiring these people [doctors]? Maybe it's better to have smaller hospitals that are honest than a conglomeration that hires anybody. This sort of news does more to ruin the church's reputation than off-shoot cults!
I am repeating what I wrote on another blog:
On this subject of salaries and fairness, some such as Schilt may have much knowledge of finances and legal details. And maybe they are right about economics, but they lack the overall picture of why we are here. Israel was to be a witness, and the “remnant church” is to be a witness at the end times (I prefer remnant movement as I see no evidence of it being an organized institution at this time.)
If this church believed in revival and witness, it would be working on a corporate level to eliminate these obvious inequalities. It would be seeking to do what is right in every culture. At this time the secular world looks for a prophetic voice that calls people to repent of their discrimination, financial irresponsibility, greed, and inequality just as the OT prophets did. This is not happening. Sermons targeting only part of revival and ignoring corporate actions, fall on deaf ears. We need leaders to put the cap back on these salaries and call on the CEOs of hospitals to turn down these salaries. These are leaders on boards, committees, and in unions and conferences who have influence. We need letter writers from the membership. Now if these leaders are unwilling to do this, we can assume that their goal for the church is not to witness and spread the gospel. The gospel to the secular world must first be lived as an example and publicized to gain respect. People will not respect the hospital system that claims to be Christian but is greedy and misuses Federal funds. Adventist hospitals are no different than other hospitals, and many are worse. It is not just high CEO salaries but malfunctions in the system as well. I suspect that it is how money is used in the denomination that is our greatest sin. That is not only in the US but in many countries where corrupt leaders have infiltrated the system. Greed speaks louder than the Gospel in these days.
We are taught to confess our sins. As this is a public issue, those involved and in the church should, if not already done, step forward and admit their wrong doing and not leave it to ambiguous, former, retired administrators to rationalize the situation.
In no way can this digression from ethical behavior be excused as a "mistake" or condoned because of complexity. As a simple person may say — if it's too complex stay away from it!
I doubt that it can be proven that SDA hospitals are any worse than other hospitals. How many on this blog, I wonder, are willing to write to those in charge and express their concern?? As I see it for an impression to be made on those in control there needs to be an onslaught of email and snail mail. Maybe administrators of AToday can post some names and addresses.
Maranatha
And are those responsible going to be fired?
Let us not be mealy mouthed about this. Those who paid the money and/or authorised it must have known that they were carrying out illegal activities and have thus demonstrated that they are not fit to carry out their job properly. If they did not know the payments were illegal they are also not capable to hold down their current job!!!
The UK here is currently carrying out wide ranging investigations of public servants receiving illegal payments because some sectors of our system are rife with problems – including sections of our police force. Heads are rolling. Will that happen within 'our' hospital system in the USA?
When will someone in authority in our church organisation start the long due campaign to remove the Adventist title from 'our' hospitals and disassociate the SDA church organisation from them.
Just interested!
Do people ever have opinions these days that are not the subject of high moral dudgeon? Many of those who have commented on this story have absolutely no understanding of Stark Law or its complexities. Most have probably never heard of it, and have no idea what I'm talking about. I do not say this to defend The White, but to suggest that we should be reticent about jumping on the moral thrills bandwagon to vilify what we do not understand.
Health care institutions are governed by tens of thousands of pages of rules and regulations that grow and change every year, and can be difficult for even lawyers to fully understand and navigate. One of the reasons health care costs so much is that every major hospital must rely heavily on national law firms with $700+ an hour lawyers, who know and understand those rules and regulations. I do not know how The White got itself into its mess. But I rather strongly suspect that the hospital failed to spend the resources it needed to on establishing a credible, effective compliance department that would have had a better understanding of legal snares that the administrators probably did not understand.
As to the scheme which led to the enormous fine, I cannot imagine that lawyers were not involved. Health care administrators simply can't do these kinds of transactions without heavy legal involvement. I suspect that one of two things happened. Either the hospital crafted the deal using general business lawyers who did not have health care law expertise, or the health care attorneys that they used foolishly tried to please the client by creatively crafting a scheme that didn't pass the smell test. Either way, I seriously doubt that the administrators realized that the deal was illegal. Nor is it clear to me that they should have known. But some public explanation from the hospital should surely be forthcoming.
I'm not saying there is no moral culpability on the part of hospital administrators. What I'm saying is that what appears to be obvious wrongdoing doesn't necessarily tell us who should be stoned.