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Adventist Health System to pay $118 million to settle fraud claims

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(Reuters) — Florida-based health care system Adventist Health System has agreed to pay $118.7 million to settle a whistleblower lawsuit that accused it of paying kickbacks to doctors in exchange for referrals, attorneys for the plaintiffs announced on Monday.

The agreement comes in a lawsuit filed by three former employees of Adventist’s Park Ridge Health hospital in Hendersonville, North Carolina, in 2012. It also resolves claims in a separate 2013 lawsuit containing similar accusations.

The bulk of the settlement, $115 million, will go to the federal government, with $3.4 million going to the state of Florida and the rest divided among North Carolina, Tennessee and Texas, according Peter Chatfield, a lawyer for the plaintiffs.

Mr. Chatfield said it was the largest settlement ever paid in a case involving hospitals paying doctors for referrals. In addition to the kickback accusations, the settlement also resolved claims that Adventist overbilled government health care programs.

Adventist’s legal department did not return a call seeking comment.

The whistleblowers could ultimately receive 15% to 25% of the settlement, but their share has not yet been decided, according to their attorneys.

The 2012 lawsuit, filed in North Carolina federal court, alleged that the kickbacks took the form of inflated salaries, bonuses and a widespread practice of allowing physicians to overbill in exchange for referring their patients to Adventist facilities.

“Unlawful financial arrangements between heath care providers and their referral sources raise concerns about physician independence and objectivity,” Benjamin Mizer, head of the U.S. Justice Department’s Civil Division, said in a statement. “Patients are entitled to be sure that the care they receive is based on their actual medical needs rather than the financial interests of their physician.”

The U.S. government and the four states intervened in the case after it was filed