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Charlotte Area News

NC Hospital At Heart Of $115 Million Federal Settlement

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A hospital about two hours west of Charlotte is at the center of a $115 million settlement announced by the U.S. Attorney’s office yesterday. The case involves whistle-blowers, allegations of government fraud and illegal kickbacks to doctors.  

Park Ridge Hospital is a 103 bed facility located in Hendersonville. And like the 43 other hospitals in the Florida based Adventist Health System, a non-profit chain, Park Ridge went on a corporate-ordered buying spree a few years ago, purchasing physician practices in the area. Then employing the doctors, nurses and staff directly.

That alone is legal.

But a spreadsheet inadvertently shared with managers across the system showed the salaries and bonus structures these employees received. It revealed a scheme to defraud the government. "They were paying doctors more if they would order patients to their hospital for tests and procedures," says Jill Westmorland Rose, the acting U.S. Attorney for the Western District of North Carolina.

Many of these tests, the government alleges were unnecessary, benefiting only the hospital’s bottom line. And, the government alleges Park Ridge and other Adventist hospitals also took part in Medicaid and Medicare fraud using a practice called 'up-coding' which U.S. Attorney Rose describes as "charging at a higher rate than the service that the patient was receiving."

All this meant big money for the hospitals. Which in turn paid big money to doctors who referred patients for expensive tests. A dermatologist there was paid $710,000 in salary and bonuses even though he only worked three days a week. And other doctors, nurses and medical staff earned hefty bonuses, not for the quality of their care but quantity of patients seen and volume of tests ordered. A clear violation of what’s known as the Stark act, says U.S. Attorney Rose. "And the purpose of the Stark Act," she adds, "is to ensure that a doctor makes medical decisions based on medical necessity and the best interest of the patient as opposed to a financial reward."

Adventists Health System admitted no liability or wrongdoing in the settlement. The company says the violations were unintentional and that they regret the oversight.