$7 Million Settlement Reached in Whistleblower Lawsuit Against All Children’s Hospital

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All Children’s Hospital in Florida has agreed to pay a $7 million settlement over a whistleblower lawsuit brought over allegations that the hospital violated anti-kickback laws.

The whistleblower allegations include that All Children’s Hospital paid inflated salaries and bonuses to physicians. In exchange, physicians were to bring in more patients and hospital revenues, according to the Tampa Bay Times.

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

A so-called “hiring spree” of physicians meant to ensure increased referrals, including some doctors being promised “significant bonuses based on the number of procedures performed” at the hospital also took place, the lawsuit alleged, according to the Times. Other allegations included that the former hospital CEO, Gary Carnes, and former vice president of strategic business services, William “Bill” Horton, saw a more than doubling of their salaries over physician hiring practices. The hospital denied all claims about executive and physician compensation.

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,” according to the lawsuit’s allegations. The hospital offered specific physicians “hundreds of thousands of dollars in bonuses and perks, bought out private medical practices, and overpaid new recruits,” the allegations continued, 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 a cited example, one 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—known as the Stark law—bans compensation that benefits physicians for referring patients using Medicare and Medicaid, according to the Times.

All Children’s relies heavily on the state and federal Medicaid program. For example, in 2010, the year the hospital opened its new facility, about 70 percent of its patient care revenues—some $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, 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 according to the Times. In agreeing to the settlement, All Children’s denied any wrongdoing.

The lawsuit was unsealed in 2012.