PITTSBURGH—The state Department of Public Welfare has terminated its contract with a psychiatrist because an audit raised questions about how much time he spent working at a state mental hospital while operating a side business.

The contract of Dr. Safdar Chaudhary was terminated on Friday, the Pittsburgh Post-Gazette reported Wednesday.

State welfare spokeswoman Donna Morgan confirmed that Chaudhary was a "contracted psychiatrist" at Torrance State Hospital in Derry Township, about 45 miles east of Pittsburgh.

"He was released, in part, as a result of the recommendations from the auditor general's audit," Morgan said, referring to a February report that found a contractor, Liberty Healthcare Corp., of Bala Cynwyd, was paid more than $400,000 in the last fiscal year for the full-time services of a psychiatrist, Chaudhary, who owned and operated a private business on the side.

The state audit found the hospital in fiscal 2010-11 paid Liberty $414,000—or $168 per hour for the 47 hours per week Chaudhary claimed to work at Torrance that year—which the audit deemed "questionable." Among other things, the audit determined Chaudhary often couldn't be found at the state hospital, even on days when he phoned in to say he was on the premises.

The doctor didn't immediately return a phone call to his practice nor a message sent to his Facebook page on Wednesday.

A website for Chaudhary's Export-based practice, S'eclairer, uses the slogan "Enlightening Self With Knowledge" and says it offers services for people with mental health, substance abuse and behavioral issues.

The practice provides "dignified and compassionate care based on wellness principles for recovery. Seeking wisdom of East and West in an original, provocative, warm and relaxing environment," according to the website, which identifies Chaudhary as a clinical assistant professor of psychiatry in the University of Pittsburgh's School of Medicine.

Liberty Healthcare does not employ Chaudhary but supplies contracted physicians and other staff to all six of the state's psychiatric hospitals.

At the time of his report, Auditor General Jack Wagner said Liberty Healthcare had a $17.5 million contract through March 2014 to provide health and medical services to multiple state entities.

Morgan, the state welfare spokeswoman, confirmed that Liberty Healthcare still has a state contract, though she could not comment on its details.

Liberty Healthcare issued a statement saying it "was involved with and supports the decision of the Department of Public Welfare." A spokesman said he could not speak to the specifics of Liberty Healthcare's state contract.