Whistleblower Suit against Children’s Hospital alleges Overpayment of Doctors

All Children’s Hospital in St. Petersburg, Florida, known for its care of sick children and annual telethons, is the focus of a recently unsealed whistleblower lawsuit which alleges the hospital overpaid some of its doctors in violation of federal law.  The case was profiled in this article by the Tampa Bay Times.

Barbara Schubert, who is represented by the James Hoyer Law Firm, is a former employee who worked for the hospital for more than a decade.  She brought the case forward to expose what she believes are violations of the Stark Statute.  The law is intended to prevent doctors from being tempted to do unnecessary tests and procedures as a way to repay their employer for overly generous compensation.

“The hospital, which is an important part of the community and a source of pride, made some mistakes, went beyond what the rules allow and skirted the regulations,” said James Hoyer Attorney Christopher Casper who is on the team representing Schubert. “The folks in this area deserve to know that the facility they contribute to was doing things it should not be doing.” 

As part of her job as Director of Operations for the hospital’s physician’s group, in 2007, Schubert was tasked with creating a new compensation plan for doctors being hired by All Children’s.  She established a pay structure based on Fair Market Value which was approved by the All Children’s Board, but then discovered the hospital often ignored those parameters and paid doctors well above the going rate.

The lawsuit contends that by 2010, All Children’s was paying its physicians more than $5 million a year above Fair Market Value. For example, a Pediatric General Surgeon was paid more than $600,000 when the going rate should have been about $300,000. More than a dozen doctors hired in the past several years were paid nearly double the established Fair Market Value.

Schubert alleges the high salaries were designed to create a powerful incentive for doctors to refer more cases to the hospital and increase its payments from Medicaid.  Casper says it’s never easy for an employee to come forward as a whistleblower, especially a longtime employee like Schubert, but she felt strongly it was the right thing to do.  “She saw what they were doing and knew they were wrong. She was disillusioned that this venerable institution was breaking the rules,” he said.

In April of 2011, All Children’s merged with Johns Hopkins, another well regarded medical institution, which Schubert believes also had concerns about the high salaries paid to doctors.

“We know during the acquisition process Hopkins learned of salaries and raised some red flags.  They immediately had some questions and commissioned a study. The study confirmed they had issues with excessive salaries. I can’t say whether they took steps to address it, but it’s something they realized was a problem,” Casper explained.

Both the US Dept of Justice and the Florida Attorney General’s office are investigating All Children’s compensation to doctors for possible violations of the Stark Law.  A government subpoena was issued to the hospital earlier this year requiring the facility to turn over internal records.

Click here to read more about the case in the Tampa Bay Times article.