Two former partners of a well-known Pasadena pediatric practice have filed a lawsuit in Los Angeles Superior Court alleging that officials with UCLA Health Systems committed fraud and breach of contract in the acquisition of their medical practice. The suit was filed by Dr. Maria Gokey and Dr. Glenn Schlundt, who were partners in the former Rose City Pediatrics for nearly 20 years. Rose City Pediatrics was acquired by UCLA Health Systems last year.
In their Verified Complaint, Dr. Schlundt and Dr. Gokey also allege that they were pressured by UCLA Health administrators to add unnecessary questions and examinations to charge more for patient services (known as “up-coding”), asked to order unnecessary medical tests before even examining each patient, and witnessed more than a dozen incidents of dangerous patient care oversights on the part of UCLA Health’s medical support staff.
“Dr. Gokey and Dr. Schlundt are remarkably courageous to have come forward,” said attorney D. Jason Lyon, a litigation partner at Hahn & Hahn LLP, who filed the Complaint on the physicians’ behalf. “Although they are still employed by UCLA Health, the doctors made a decision to set aside their personal security because they felt it was their duty to blow the whistle on UCLA Health’s questionable business and medical practices.”
According to the Complaint, the idea of UCLA Health’s acquisition of Rose City Pediatrics first arose in 2018, when Dr. Gokey had a conversation with her former residency classmate, Mark S. Grossman, MD. Dr. Grossman is now UCLA Health’s Chief Medical Officer. Dr. Grossman reportedly proposed that the Rose City doctors should become UCLA Health employees, and that they would be compensated for the value of their practice in a series of annual installments he called “transition payments.” He promised that the practice would operate virtually as it had before the acquisition, with the same high quality of patient care.
After the doctors signed their employment contracts, rechristened the office “UCLA Health Pediatrics of Pasadena,” and introduced their patients to the new practice, however, the transition payments never materialized, the claim alleges.
Instead, Dr. Grossman told the former Rose City doctors, their compensation for the practice was now “hidden” in bonuses in their employment contracts, with the apparent purpose of shielding the acquisition from bureaucratic and public oversight. The payments were also substantially less than promised and made contingent on achieving certain performance metrics. In other words, the payments were suddenly not guaranteed at all, the suit said.
“Although UCLA Health promised in writing to compensate Dr. Schlundt and Dr. Gokey for the value of their practice with these transition payments,” said attorney Lyon, “It now claims that a separate employment contract signed by each doctor erased UCLA Health’s duty to pay for the practice. We believe the evidence proves otherwise, and we are confident that when the full scheme undertaken by UCLA Health comes out, a jury will side with the doctors and order UCLA Health to honor its promises.”
In the Complaint, the doctors allege that UCLA Health is undertaking a “systematic campaign” to pressure them to quit the practice. They note that if UCLA Health succeeds in driving them out, the healthcare giant will have acquired Rose City’s valuable PPO-only patient roster for a fraction of its value, and UCLA Health can replace the Rose City doctors with younger, less costly medical personnel. The Rose City doctors say they believe this was UCLA Health’s plan all along, and that theirs is not the first practice acquired in this fashion, the suit alleges.
Since the transition, the doctors also allege they have observed a substantial impairment of the quality of patient care. The Complaint recounts incidents in which inadequately trained UCLA Health staff are alleged to have made serious errors in treating children, including administering an unapproved vaccine to an infant, leaving an exposed hypodermic needle within reach of a toddler, failing to deliver multiple medical specimens to the laboratory, failing to report test results to doctors, including a child with critically low blood oxygen saturation levels who should have been hospitalized, and failing to inform the treating physician that a teenage patient reported thoughts of suicide, are among the claims.
The Complaint also details an incident in which it alleges a medical assistant refused to administer medication to a toddler in acute asthmatic respiratory distress because the order was not properly entered in the office computer system. According to the Complaint, Dr. Grossman, the Chief Medical Officer whose online biography says he is board-certified in pediatric medicine, later expressed the view that procedure should take precedence over care even in an emergency.