Broward Health: The Settlement Over Above-Market Physician Pay

Broward Health agreed to a $69.5 million physician compensation settlement over allegations that it overpaid employed doctors for their referrals. The physician whistleblower’s complaint described practices that lost money while the hospital tracked the profits their referrals brought in.

North Broward Hospital District, which operates as Broward Health, is a Florida special taxing district running a public healthcare system in Broward County. The Department of Justice announced the settlement on September 15, 2015.

Broward Health’s Employed Specialists and Fair Market Value

The government alleged that Broward Health paid nine employed physicians more than the fair market value of their services and contended that the agreements violated the Stark Law and the False Claims Act. The complaint’s detailed account of orthopedic surgeons and cardiologists shows what the physician whistleblower said sat behind those salaries.

The physician self-referral law, known as the Stark Law, restricts financial relationships between hospitals and referring doctors. An improper compensation arrangement can bar Medicare payment for the referred services. The hospital’s bills then connect the pay arrangement to a False Claims Act case. The practical question is what the hospital was paying the physician to provide and how the referrals entered that price.

Why a Losing Physician Practice Could Still Pay

Downstream referrals can make a physician practice worth more to a hospital than its own collections suggest. Employment can bring the hospital imaging, laboratory and surgical business. In a hospital outpatient department, Medicare pays a facility fee alongside a reduced professional fee. The physician’s own bill is only part of the revenue attached to the patient.

That helps explain why hospitals buy physician practices and why the salary decision deserves attention. A practice’s operating statement and the hospital’s referral-revenue report can tell very different stories about the same doctor.

The whistleblower’s complaint alleged that Broward projected inpatient and outpatient referral profits before hiring physicians and used those projections in setting compensation. It then tracked the business in contribution-margin reports. When referrals failed to cover the pay, the complaint alleged, management pressed physicians for more hospital business.

The complaint put the orthopedic practice group’s loss halfway through fiscal 2011 at $2,482,446. Against that loss, it tracked hospital referral profits of $1,341,280 from inpatient care and $2,318,359 from outpatient care.

For one orthopedic surgeon, the complaint put the compensation-to-collections ratio in 2009 at 1.24, against a national 90th-percentile benchmark of .835. More went to the surgeon’s pay than the practice collected.

On the whistleblower’s account, the loss was part of the plan. The hospital expected to make its money elsewhere in the patient’s health care. Executives also allegedly benefited through a Management Incentive Plan that paid bonuses up to 20 percent of salary, based partly on the hospital system’s financial performance.

The complaint alleged that county tax dollars covered 75 percent of direct costs for uncompensated care. Broward deducted the remaining 25 percent from the referring physician’s contribution margin and used those reports to discourage charity referrals, the whistleblower said.

It also described pressure on orthopedic surgeons to keep radiology referrals inside Broward despite concerns about imaging quality. The alleged scheme put taxpayers’ Medicare dollars behind bought referrals and hospital margins ahead of patients’ care.

Inflated Productivity Behind Physician Pay

Broward allegedly let high-referring physicians inflate their work relative value units to increase their compensation. These productivity measures could make pay for referrals look like pay for work.

The complaint described physicians unbundling procedures to claim more work RVUs and Broward failing to apply reductions for multiple procedures performed together. An internal analysis cited in the complaint put one cardiologist’s credited work at 9,004 hours for a year. The whistleblower alleged that management knew the figures were inflated and continued the excessive pay.

Medical-Director Pay Without the Work

Broward’s medical-director arrangements allegedly added compensation without requiring the work the contracts described. The complaint said cardiologists received the maximum contract payments even when Broward did not obtain the required time records or review the substance of the work.

One medical director allegedly counted personal exercise as director time. Another counted hours spent doing procedures. A third allegedly could not read studies in the laboratory he directed. The whistleblower described these arrangements as another way to raise physician pay in return for referral revenue.

For a clinical employee who knows what happens in the department, that is a different view of compensation from the one payroll sees. The contract names a service. The time records and the department’s actual work show what the hospital received for it.

The Referral Forecast Was There Before the Contract

The physician whistleblower alleged that he warned Broward’s board about proposed orthopedic compensation before the doctors joined. His concern was specific: the hospital’s financial forecast included anticipated referral revenue, and without that revenue the proposed arrangements would produce large operating losses.

According to the complaint, Broward publicly said it would stop using that forecast to determine compensation. The whistleblower alleged that the hospital continued using referral profits behind those assurances. The useful evidence was therefore more than an expensive contract. It included the original forecast, the concern raised about it, the response and the later reports showing how the arrangement worked.

What Other Physician Compensation Cases Expose

Community Health Network‘s physician recruitment case shows why compensation valuation inputs matter. In its settlement announcement, the Justice Department alleged that the hospital supplied false compensation figures to its valuation firm and ignored repeated warnings about overpaying physicians. A favorable opinion depends on what the valuator was told.

The government’s amended complaint also alleged that incentive pay depended on referral-revenue targets: among other conditions, the network paid the part of the incentive tied to a service line’s financial performance only when the physician’s referrals to the hospital met revenue targets.

Tuomey tied physician pay to collections while the hospital received a separate facility fee for the procedures. A jury found that the contracts violated the Stark Law: personally doing the work did not remove anticipated referrals from the compensation calculation.

Halifax Hospital‘s oncologist bonus included the value of drugs and tests the doctors ordered and the hospital billed to Medicare. The court ruled that those contracts violated the Stark Law.

Adventist Health System likewise settled allegations that its physician bonus formula took referral value into account.

Kalispell Regional Healthcare‘s $24 million case reached specialist work hours. The government’s September 28, 2018 announcement described alleged full-time compensation for more than 60 specialists, many working far less than full time. The whistleblower was the former chief financial officer of its physician network. Broward’s case came from a physician. Both jobs can expose the gap between the salary and what it buys.

What the Contract File Leaves Out

The Broward complaint makes the value of an insider’s explanation concrete. A compensation agreement says what the parties signed. The forecast, referral report, valuation inputs and work records can explain why they signed it. Hospital whistleblowers in finance and clinical roles see different parts of that same decision.

A study in the Journal of Forensic and Investigative Accounting examined hospital fraud cases reported by the Justice Department and highlighted the difficulty of detecting arrangements involving collusion. That matters when the people approving physician pay also stand to benefit from the hospital’s referral business: once those people act together, the paper warns, internal controls can lose their meaning.

For illegal patient referrals, the paper identified inquiries involving provider staff and checking whether contracted services were real as useful detection approaches. That gives the medical-director allegations a practical context. Someone who knows the work can explain what an approved contract and a paid invoice leave unanswered.

The Physician’s Broward Health Whistleblower Reward

The physician who brought Broward’s qui tam case was awarded about $12 million from the recovery, according to the Justice Department.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In this case, the physician said he had supplied the Justice Department with contribution-margin reports covering multiple years. He could connect the compensation decision to the hospital’s own account of the business it generated.

The Reason Behind the Salary

You may know why management approved a specialist’s salary and what hospital business it expected in return. Speak with our whistleblower experts about the pay decisions you witnessed. We bring in whistleblower lawyers who know physician compensation and stay with you to build your strongest hospital whistleblower case from the salary, the work and the referral business.