Health Group Run by Dem Donor to Pay $118M to Settle Fraud Allegations

Attorney: largest health care fraud settlement ever involving physician referrals to hospitals

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A large health care organization headed by a major Democratic donor has agreed to pay $118 million to settle false claims and fraud allegations brought against the company by a group of whistleblowers.

The Department of Justice announced on Monday that the Florida-based Adventist Health System, a nonprofit health care organization that operates 44 hospitals in 10 different cities, has agreed to pay $118 million to settle claims that the group had arranged an improper compensation system that paid physicians for referrals to their hospitals.

The organization provided compensation that included leasing a BMW and Mustang for one surgeon, offering a $366,000 base salary for a family practitioner—nearly double that of the average salary of similar practitioners in the area—and providing a bonus of $368,000 and a total salary of $710,000 to a dermatologist who worked three days a week.

Additionally, the group was accused of submitting false claims to Medicare and Medicaid for services rendered to the patients who were referred to their system.

"Unlawful financial arrangements between heath care providers and their referral sources raise concerns about physician independence and objectivity," said Benjamin C. Mizer, the head of the Justice Department’s civil division. "Patients are entitled to be sure that the care they receive is based on their actual medical needs rather than the financial interests of their physician."

Donald Jernigan, the CEO and president of Adventist, is a prominent political donor within Florida and has provided six-figure financial support to the Democratic Party nationwide.

Jernigan’s contributions include $30,000 in donations to the Democratic National Committee, $17,500 to the Democratic Congressional Campaign Committee, $10,000 to the Florida Democratic Party, $5,000 to President Obama’s 2012 campaign, and $2,700 to Hillary Clinton’s campaign this year.

The lawsuits against Adventist were initially brought forth in 2012 by Michael Payne, Melissa Church, and Gloria Pryor, who were based out of an Adventist hospital located in Hendersonville, N.C. Sherry Dorsey, the fourth whistleblower, worked out of the company’s corporate office.

Each will receive a percentage of the settlement for blowing the whistle on the system’s practices.

The $118 million dollar settlement is the "largest healthcare fraud settlement ever made involving physician referrals to hospitals," according to Peter Chatfield, an attorney from Phillips and Cohen who represented the whistleblowers on the case. In total, $115 million of the settlement will go to the federal government, $3.4 million to Florida, $198,454 to North Carolina, $66,897 to Tennessee, and $4,711 to Texas.

"Companies that financially reward physicians in exchange for patient referrals—as the government contended in this case—undermine the physicians’ impartial medical judgment at the expense of patients and taxpayers," said Derrick L. Jackson, an HHS special agent. "We will continue to investigate such wasteful business arrangements."

The Washington Free Beacon attempted to reach Adventist’s headquarters for comment but was unsuccessful.

Joe Schoffstall   Email Joe | Full Bio | RSS
Joe Schoffstall is a staff writer for the Washington Free Beacon. Previously, he spent three years with the Media Research Center and was most recently with the Capitol City Project. He can be reached at Schoffstall@freebeacon.com. His Twitter handle is @JoeSchoffstall.

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