US Declines to Intervene in Orthopedic Surgeon’s FCA Whistleblower Suit

In May 2019, Florida orthopedic surgeon Ayman Daouk, MD, brought a whistleblower suit against his employer, Orlando Health, and several of its subsidiaries, alleging that the organization fired him after he performed surgery at out-of-network facilities and made out-of-network referrals. Earlier this year, the US filed a notice declining to intervene. The State of Florida followed along shortly thereafter, also declining to intervene.

Dr. Daouk is an orthopedic surgeon in Orlando, FL. He was employed by Physicians Associates, LLC (“PAL”), an Orlando Health subsidiary, from 2009 through the end of 2018. While at PAL, Dr. Daouk was among the top ten revenue earners for the practice. PAL did not become associated with Orlando Health until a 2012 takeover. Dr. Daouk alleges that, after the takeover, Orlando Health routinely emphasized to their PAL providers that referrals “needed to be made within the ‘integrated network’ of Orlando Health.” At first, he alleged, this was “merely a suggestion,” but over time became mandatory “with threats made against those who failed to comply.”

In the suit, Daouk indicated that he was reprimanded for performing surgeries at a hospital that was not affiliated with Orlando Health, and that PAL eventually notified him that it was terminating his privileges with that non-affiliated hospital. While this did not prevent Dr. Daouk from using the non-affiliated hospital, to continue to do so, he had to obtain his own privileges and malpractice insurance policy. When Dr. Daouk objected to this, PAL responded that performing surgeries at other hospitals was “send[ing] a very negative message to your employer.” The pressure to use the integrated network continue to mount over the years, according to Daouk, even though facilities not affiliated with Orlando Health were providing faster, higher quality work.

Dr. Daouk’s employment was ultimately terminated in 2018. He asserts that he was expressly told “that he was being terminated because he was continuing to do surgeries at non-Orlando Health facilities.” Daouk also alleges that, even after his termination, Orlando Health tried to limit his ability to perform surgeries at non-Orlando Health facilities during a transition period.

Daouk alleged that Orlando Health, and its subsidiaries, is violating the Anti-Kickback Statute (“AKS”) as it offers its physicians remuneration, in the form of salaried employment and benefits, in exchange for referring patients to Orlando Health facilities. The suit also alleges that because Orlando Health owns these affiliated facilities, and has compensation arrangements with its physicians, “there exists an unbroken chain of financial relationships” that violate the Stark Laws. Further, the suit alleges that these violations also constitute False Claims Act (“FCA”) violations. Finally, Daouk alleges that Orlando Health violated the Florida Private Sector Whistle-Blower Act by subjecting him to retaliatory personnel action because he refused to participate in this illegal activity.

Even though the US and the State of Florida declined to intervene in the case, Daouk can pursue the case on his own. If he wins, he could be awarded up to 30% of the judgment.  This case is a good example that unless there is serious compelling evidence the government may not choose to join whistle blower suits.