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Adventist Health and White Memorial Medical Center Agree to Settle Anti-Kickback Case for $14.1 Million

Earlier this month, the Department of Justice announced a $14.1 million settlement it reached with Adventist Health System and its affiliated hospital White Memorial Medical Center.  The settlement was the result of a qui-tam lawsuit that was filed against the companies accusing them of violating the Anti-Kickback Act and the Stark Statute.  Of the $14.1 million, $11.5 million will go to the federal government and $2.6 million will go to California’s Department of Health Care Services.

Adventist Health operates hospitals and clinics in California, Hawaii, Oregon, and Washington.  According to their website, the company operates 19 hospitals and over 150 clinics and outpatient centers.  They employ over 21,000 employees, 4,500 medical staff physicians, and 3,000 volunteers.  White Memorial Medical Center, one of Adventist Health’s affiliates, is a teaching hospital in Los Angeles, California.

According to the lawsuit filed against the companies in 2008, Adventist Health was improperly compensating physicians for patient referrals to White Memorial by transferring medical and non-medical supplies and other inventory to the physicians at less than fair market value.  White Memorial was also accused of paying referring physicians at a rate above fair market value for teaching services at the family practice residency program.

The Anti-Kickback Act bans offering, paying, soliciting, or receiving kickbacks of any kind in order to encourage referrals of an item or service covered by federally funded programs.  The Stark Statute bans hospitals from submitting claims to federally funded programs for patient referrals by physicians with improper financial relationships with that hospital.  The allegations brought against Adventist Health and White Memorial violate both these laws which were designed to ensure impartiality in physician referrals and services.

The whistleblowers in this case were Dr. Hector Luque and Dr. Alejandro Gonzalez.  Between 1995 – 1999, Drs. Luque and Gonzalez were members and then partners of White Memorial.  From 1999 to at least 2008 when the complaint was initially filed, they continued to treat patients at White Memorial.  Drs. Luque and Gonzalez will collectively receive $2,839,219 as their portion of the government’s recovery in this settlement.

For more information on Anti-Kickback qui-tam suits and for a free consultation regarding your potential case, contact the experienced attorneys at Tycko & Zavareei LLP today.