Hospital CEO’s Whistleblower Lawsuit Settles for $9.8M

whistlePicture1Georgia academic medical center has agreed to pay the federal government $9.8 million to settle a whistleblower lawsuit brought by a former top official of Upstate University Hospital.

Phillip S. Schaengold, CEO of Upstate from 2006 to 2009, filed the lawsuit against Memorial Health University Medical Center of Savannah after the facility fired him as its president and CEO in 2011. Schaengold left Upstate to take the job at Memorial in 2009.

In his lawsuit, Schaengold accused Memorial of overpaying many of its doctors to reward them for referring patients for other services within the Memorial system, a violation of federal anti-kickback laws.

The suit said Memorial paid doctors bonuses of about $3 million in 2008 that were determined in whole or in part on the volume of referrals for services such as lab tests and radiology exams.

Schaengold in his suit said he told Memorial’s board of the problem and advised Memorial it was legally obligated to stop the payments immediately. Schaengold said Memorial’s board fired him a few days later in retaliation. The federal government intervened in the case and also filed a complaint against Memorial.

Memorial did not admit any wrongdoing as part of its settlement with the U.S. Department of Justice and has consistently denied the accusations Schaengold raised in his complaint.

Memorial paid more than $5 million to the federal government in 2008 to resolve similar compensation problems.

Schaengold will get almost $2.3 million out of the payment Memorial has agreed to make to the federal government, according to the settlement.

Memorial also has agreed to pay Schaengold’s attorneys fees.

The settlement is the largest civil health care fraud recovery for the U.S. Attorney’s Office for the Southern District of Georgia.


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