Healthcare provider Adventist Health System has agreed to a $118.7 million settlement to resolve a whistleblower lawsuit alleging the provider overcompensated doctors for referrals.

Florida-based Adventist Health System is a nonprofit, faith-based health care provider that operates 44 hospital campuses in ten states.

The organization’s website says it serves 4.7 million patients annually through its urgent care centers, home health agencies, hospice agencies, and skilled nursing facilities.

The settlement is the culmination of two whistleblower lawsuits filed by four plaintiffs who had worked at Adventist facilities. Claimants had alleged that Adventist submitted false claims to the Medicare and Medicaid programs by using a formula that included consideration of the value of doctors’ referrals to Adventist facilities.

The settlement also addresses allegations that Adventist submitted improperly coded Medicare claims, resulting in excessive reimbursement to Adventist from Medicare.

Adventist Health Whistleblower Lawsuit Allegations

Adventist hospitals allegedly paid their doctors bonuses based on the number of tests and procedures they ordered, in violation of federal law. Claimants had also alleged Adventist gave doctors excessive compensation in both salary and perks in exchange for those doctors’ referring their patients to Adventist facilities.

Among other specific allegations, complaints filed in these whistleblower lawsuits allege that Adventist hospitals paid one family practitioner more than double the going salary for comparable physicians in his geographical area, based on his referrals to Adventist facilities for X-rays and testing. Another physician received a total of $710,000 in annual compensation while working only three days a week.

The settlement amount will go to the U.S. and to four state governments. No determination of liability was made as part of this settlement, according to a statement by the U.S. Justice Department. An assistant attorney general from the department noted that “[u]nlawful financial arrangements between heath care providers and their referral sources raise concerns about physician independence and objectivity.”

The Department says this settlement is part of the governments’ Health Care Fraud Prevention and Enforcement Action Team initiative, a cooperative effort initiated in 2009 between the Justice Department and the Department of Health and Human Services to combat fraud in Medicare and Medicaid.

The Justice Department says it has recovered more than $16 billion in cases involving federal healthcare fraud since 2009.

Whistleblower Qui Tam Lawsuits

Whistleblower claims like these are sometimes known as qui tam actions, named for the qui tam provisions of the federal False Claims Act under which they are filed. A qui tam lawsuit allows a private party to sue over another party’s fraudulent dealings with the U.S. government.

Once filed, a qui tam lawsuit is kept confidential between the claimant and the Justice Department while the Department investigates the circumstances surrounding the allegations and decides whether to intervene. If the Department decides not to intervene (as it does in most cases), the claimant may continue to pursue the claim on her own.

If the whistleblower lawsuit is successful, the plaintiff gets to share in the recovery. The False Claims Act also provides certain employment protection to shield whistleblowers from retaliation by their employers.