Adventist Health System Agrees to Record Settlement in Whistleblower Lawsuit

Altamonte Springs, Florida-based Adventist Health System will pay nearly $119 million to settle a 2013 lawsuit brought by three whistleblowers, all former employees of Park Ridge Health in Henderson, North Carolina. The settlement nearly doubles a previous U.S. record settlement of $69.5 million, paid just last week by Broward Health, whose headquarters are in Fort Lauderdale, Florida, in a "scheme of mutual enrichment" between Broward and its physicians.

Adventist Health System said in a statement Monday,

Adventist Health System regrets these oversights, and while some of its hospitals had no violations, the organization has improved monitoring and business practices system-wide as a result of lessons learned from this experience so that it can continue to uphold the highest standards of compliance with regulations.

The statement also noted that, according to its own internal investigation, there were no negative effects on patient costs or safety, and no impact on quality as a result of the infractions.

In the Adventist Health System suit, the United States Department of Justice contended that AHS paid improper bonuses to its physicians for referring patients to AHS hospitals in Florida, North Carolina, Tennessee and Texas and submitted false claims to the Medicare and Medicaid programs for services rendered by the physicians who received the improper bonuses. AHS also used improper coding modifiers to bill Medicare, the DOJ contended. The health system's actions constituted violations of the Stark Law and the False Claims Act, according to the lawsuit.

The payout amounts to the largest healthcare fraud settlement ever made involving physician referrals to hospitals. However, there was no determination of liability in the case.

A report in Modern Healthcare revealed that the Adventist Health System settlement is the third and most costly of three similar cases involving the Stark Law in the month of September. On the 4th, Columbus Regional Health in Georgia paid $35 million to settle a suit alleging improper billing. Broward Health's settlement, which may also bring criminal charges, came on September 15. On the 22nd, Adventist Health System settled its case.

Revelations by three Park Ridge Health employees—Melissa Church (executive director of physician services), Michael Payne (who worked in risk management), and Gloria Pryor (compliance officer for physician offices) —led to the suit against AHS. In addition to disclosures of improper billing and payments for referrals, they revealed that the health system leased a BMW and Mustang for a surgeon, and paid a bonus of nearly $368,000 plus salary for total annual pay of $710,000 for a dermatologist who worked just three days a week.

Adventist Health System says the payment "fully resolves issues AHS voluntarily disclosed to the United States government in early 2013 involving its implementation of certain physician employment compensation models and highly technical physician billing and coding issues."

According to the Modern Healthcare systems financial database, AHS had an operating revenue of almost $8.4 billion in 2014. With 45 hospital campuses with nearly 8,300 licensed beds in 10 states, it is one of the largest health systems in the United States.

Jared Wright is Managing Editor of

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Good for the Whistle Blowers or this would have been going on indefinitely. Bad for a supposedly church affiliated hospital system…despite the very hefty fine the real damage is to their (Christian?) reputation.


This is unfortunately a very common practice in the health care industry regarding the billing of government health care entities. The practice of those government providers is such that they will only cover pennies on the dollars for services rendered, so (many) physicians and hospitals routinely use codes for more expensive (but technically related) procedures to ensure a payback closer to the actual value of the original service rendered. That doesn’t make it right, but is is one of the many aspects of our broken health care system.


In light of the information contained in this article and the recent problems
that Adventist health entities have had in their operations, we need to reexamine
the policies and performance standards within our church affiliated institutions.
Many question the notion that well intentioned pastors because of their church
posts are qualified to lead out in the respective boards that govern these business
health entities. The major problem facing these places that carry the name of
Adventists Care, is do they really care about the communities they serve?
There is a philosophical, almost existential, question of whether an Adventist
health care entity can really care about the individuals that are employed by it
and that it is supposed to serve. We need to examine the means an Adventist
health care corporation might use to promote an “ethical caring culture”.
We need to look into and review carefully the profit status, ethical codes,
compliance programs, and market competition on the basis of a reputation for
caring. In order to promote a genuine ethic of caring, we must develop
mechanisms to measure caring. So central, so important, and yet so elusive
is the concept of care. In this age of corporate delivery of health care services,
we must not lose sight of the “care” in health care. If a facility or service that is provided to the general public as Adventist Health Care, how do we demonstrate that it is efficient, fair, and ethically transparent? This brings me to the
question of how best to create and implement a deliberate and intentional
ethical corporate climate in which care is a serious and MEASURABLE core value.
There are problems in our educational and financial investment areas, but
this one in health care that is elusive and for many in church administration going past us as “routine” and “normal in the course of business” (as one SDA Health Care executive put it) may be as hurtful and significant as discrimination against women in ministry.

The CEO of Florida Hospital, Orlando received $1.8 in compensation according to the 2011-2012 Suvey.

Think it’s time they denounce abortions while they’re at it.

Salaries go against the Cost of Doing Business.
I had some lab work done a few weeks ago. I got my “statement” back from Medicare [A and B]. One one item, they only paid $10 for a much larger billing.
That is typical of Government Health Insurance, and has been for years.
On Hospital Codes of In Patients. The person may come in the hospital because of a number of issues. If one Codes on the Billing Form the WRONG Code first [1st], the hospital can lose thousands on that patient. So the hospital has to be on top of the physician to make sure the “correct” Diagnosis is listed 1st, in order to re-coup the money that was spent taking care of the person and providing the needed diagnostic services.
There ARE some things that are NOT allowed in Government billing. And the person has to pay for them. That is why some care items that were automatic a number of years ago, are not offered to the person, and some are not even available. They are Loss Items to the hospital.


I represent about thirty medical care providers (not affiliated with the Seventh-day Adventist Church) and am generally familiar with the legal issues in this case. The governing law is highly technical and complicated. I see no scandal here that would raise issues of concern to the Church.


liying and cheating is not a s scandal? tomZ

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Having been involved in hospital and physician billing for 38 years, I have watched the evolution of the regulations from considering the bill as an invoice to considering it now as a representation of a medical record. Codes were established in order to “digitize” the information. The codes require a medical coder to translate the narrative of a provider to a specific code. Not always accurately due to the complexity of coding systems and perhaps incomplete narrative descriptions of the provider. Ex. when coding for a simple blood test, it will be paid if a “patient is on medication” diagnosis is present on the claim, but not if it is not. Huge dollars are at stake. This leads to inadvertent errors. But also purposeful upcoding. Stark regulations are similarly open to possible misinterpretation. The two levels of protection are dedicated compliance officers (who seem to have been present here,) and external independent auditors who have attorney client privilege who keep administrations informed. Not quite enough information to know if this was deliberate, but it seems since compliance officers were the whistleblowers it quite possibly was more deliberate than inadvertent.

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i think this explanation sounds reasonable…workers, including physicians, should be paid what their services are worth, even if it involves manipulating the system a bit…after-all, when the system isn’t manipulated a bit, these physicians end up being under-paid…would the plaintiffs in this case be as concerned with such an outcome…probably not…to me, these plaintiffs seem envious…

Q: In what world is a dermatologist worth $700,000 a year for a 3 day week?

A: In one where the free market is not operating properly.


i’ve been on Medicare for 25 years and always read carefully their statements, having worked as a medical coder for years. Physicians charge, knowing that they will get only a small portion of that charge.
Lab charges (husband was a pathologist) which used to be for a straight procedure, are now billed separately, although are run at one time on the same machine.

Charges vary greatly according to the geographic area and doctors together have a set rate they usually charge, although not mandatory, If one doctor charges much less than the others, there are loud complaints from the other docs for “undercutting” the system.

Once in a while payment is denied: my “former” cardiologist was not paid for a cardiac catheterization because prior to procedure, he had written “no evidence of CAD.” I was glad because it has risks and I did not need it. There must be extenuating circumstances documented if larger than normal fees are charged for similar procedures. Medicare is so complex, who understands it? But we should all watch for wrong charges as the fraud in Florida by docs charging for work not done, or overprescribing pain meds cost the government (us) billions.

(Possibly) true, although for the size of enterprise he’s over that’s an extremely low salary. And remember, it’s Florida Hospital, which is 5 hospitals in east Florida, 9 hospitals in central Florida, 9 hospitals in west Florida, and also dozens of clinics and other medical services.

Phil, I love your “move along, nothing to see here” approach. I was inclined to agree until I tripped over the $119,000,000 fine!!!

Church or health leaders who let this happen are either incredibly greedy, incredibly dense, or think that God would somehow “bless” them out of this.

When it comes to integrity, one would think that the church would be above reproach but instead their hospitals are (objectively speaking here since it’s the largest fine) the worst of the worst. Let me repeat it for emphasis - the worst of the worst.

At least they don’t ordain women and still preach homosexuality is a sin. That’s what God really cares about, you know.

The American people whom the hospitals bilked not only deserve their money back, but they deserve an apology. This was fraud, pure and simple.


Who are they kidding? It is bound to get worse.

Come October 1, 2015, ICD 10 will be the “law of the land” with 68,000 diagnoses vs 13,000 for ICD 9. You make one CPT/ICD 10 coding error and, WALA! you’re bound to be “fraudulently” billing.

BTW, how much did the whistleblowers get from the $69.5 million settlement?


@tjzwemer @phil @sdaequalitynow1 @DonB


The fine is $119,000,000.

How many scholarships for future Adventist health care professionals would that cover?

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I do not have a problem with a CEO of a large organisation, which is exposed to huge potential regulatory liability, being paid well for leading the organisation well. That includes ensuring that good systems are in place to ensure compliance.

Here, from what we can see at a distance, we have someone being paid well, but the systems did not catch a problem. That is failure at a high level, and someone more competent should be appointed to the role.

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If workers, including physicians, don’t believe they are being paid what their services are worth, then they should not sign the contract agreeing to provide the services at the reduced rate. What the plaintiffs’ motives were should be irrelevant. If a wrong was done, a wrong was done.


or one could read that statement as fraud, and FYI, using medical codes that do not actually represent the facts, is called FRAUD in the eyes of the law, and in some cases has carried an mandatory jail time for some, and when you over bill, the doctors must repay the insurance with interest (by law), so sure lets lie, I’m sure it sets a great example of how Christians do business.

Additional note: this conversation from the AAPC (the people who certify medical coders) is a great start to the liabilities of medical coding,

It’s also important to note many people confuse medical coding with medical billing, they are related, however they are not the same. In addition Medical coding is also used for statistical use and medical research, so its important that the codes used accuracy reflect the truth.