Whistleblower Lawsuit Against All Children's Hospital Leads to $7 Million Settlement

Author: Cynthia Diaz Shephard/Fri, Apr 18, 2014/Categories: News & Articles

whistleblower-300x257Florida’s All Children’s Hospital just agreed to pay $7 million to settle a whistleblower lawsuit that was brought over allegations the hospital violated anti-kickback laws.

Whistleblower allegations include that All Children’s Hospital paid increased salaries and bonuses to physicians in exchange for their bringing in more patients and hospital revenues, according to the Tampa Bay Times.

The lawsuit was filed in July 2011 by a whistleblower who was director of operations for the doctors’ practice at All Children’s for more than 10 years; she left the hospital in 2011. She claimed that All Children’s Hospital overpaid physicians by some $5 million in 2010, alone, a violation of laws put in place to regulate the financial relationships between hospitals and the physicians who bring in patients, the Times reported.

The lawsuit discussed a so-called “hiring spree” of physicians that was meant to ensure increased referrals, including that some doctors were promised “significant bonuses based on the number of procedures performed” at the hospital, according to the Times. Allegations also included that the former hospital CEO, Gary Carnes, and former vice president of strategic business services, William “Bill” Horton, both had a more than doubling of their salaries due to their physician hiring practices. For its part, the hospital denied all claims about executive and physician compensation.

According to the lawsuit, in the mid-2000s, All Children’s Health System “began to feel the sting of lost Medicaid patients and referrals as local competition increased and physicians began referring their patients to other facilities, just as the health system broke ground on a new, $400 million hospital facility.” The hospital offered specific physicians “hundreds of thousands of dollars in bonuses and perks, bought out private medical practices, and overpaid new recruits,” also according to the suit, reported the Times. By year three of the effort, “some 80 physicians in 10 specialties” were hired with exclusivity agreements and financial incentives to keep their referrals within All Children’s, the lawsuit also indicated.

In one example, a pediatric surgeon was hired at a base salary of $600,000, at a time when the fair market value for a doctor with his experience was about $350,000, according to the lawsuit. Meanwhile, the federal Ethics in Patient Referrals Act—also known as the Stark law—bans compensation that benefits physicians for referring patients using Medicare and Medicaid, according to the Times.

The hospital relies heavily on the state-federal Medicaid program. In fact, in 2010, the year the hospital opened its new facility, some 70 percent of its patient care revenues—$370 million—were received through the Medicaid program, according to an annual report cited in the lawsuit, the Times wrote.

As part of the settlement agreement, the Times reported that All Children’s will pay the federal government $4 million and the state of Florida $3 million. The whistleblower will receive $1.9 million from the state and federal figures. In agreeing to the settlement, All Children’s denied any wrongdoing.

The lawsuit was unsealed in 2012.

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