DOJ Sets New Record for Stark Settlement in Adventist Health Resolution

Less than a week after announcing a $69.5 million Stark settlement with North Broward Hospital District, the U.S. Department of Justice has settled two qui tam actions against Adventist Health System (Adventist), which operates some 44 hospitals in 10 states, for $11.5 million. As a result of the settlement, Adventist also will pay four states a total of $3.7 million. According to counsel for one of the relators, this is the largest Stark settlement ever. The allegations in these cases focused on activities that occurred in Adventist facilities located in Florida, North Carolina, Tennessee, and Texas. The actions against Adventist Health System were initiated by Sherry Dorsey, a chief operating officer of physician enterprise, and by Adventist's Park Ridge Health employees Michael Payne, risk manager, Melissa Church, executive director of physician services, and Gloria Pryor, compliance officer for physician offices, alleging violations of the federal Stark, Anti-Kickback, and False Claims Acts. The complainants alleged that compensation offered to physicians, mid-level practitioners such as nurse practitioners, and physician assistants was above fair market value (FMV), as evidenced by Adventist's substantial and consistent losses on their physician practices. In these qui tam complaints, the plaintiffs contended that for a period in excess of ten years employed physicians and mid-level practitioners were compensated at levels that were above FMV, were not commercially reasonable, and were based in substantial part on the volume and value of inpatient and outpatient referrals of designated health services (DHS) to their hospital employers.