Whistleblower accuses hospital of overpaying docs $5M

After a former employee accused the hospital of Stark violations, All Children's Hospital in St. Petersburg, Fla.--a merged hospital with Johns Hopkins Medicine--is under investigation from the U.S. Department of Justice and state attorney's office, the Florida Attorney General confirmed yesterday.

Barbara Schubert, the former director of operations for the physician practice, in July 2011 filed suit against the hospital, accusing All Children's of overpaying its physicians by about $5 million in 2010, well above fair market value, to incentivize them to refer patients, the Tampa Bay Times reported.

Although Schubert said she designed compensation around national norms, which was approved by the board, the hospital instead hired at least 75 physicians within three years, with about one-third of them receiving base salaries higher than the 75th percentile in the industry, the newspaper reported.

For instance, it hired a pediatric surgeon at a base salary of $600,000, when the fair market value for a doctor with his experience was closer to $350,000, the lawsuit alleges.

"We believe (the suit) to be factually inaccurate and flawed from a legal perspective," hospital spokeswoman Ann Miller told the Tampa Bay Times. "We intend to defend ourselves vigorously."

When Johns Hopkins merged with All Children's in 2011, it hired an external consultant to review the contracts, the lawsuit alleges.

"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," attorney Christopher Casper at James Hoyer Law Firm, which represents Schubert, said in a statement today. "I can't say whether they took steps to address it, but it's something they realized was a problem."

For more information:
- read the Tampa Bay Times article
- see the statement from James Hoyer Law Firm