UPMC Hamot agrees to $20.75M settlement over alleged kickbacks

UPMC Hamot and a regional cardiology practice have agreed to a $20.75 million settlement with the Department of Justice over allegations of kickbacks and “improper financial relationships.”

The U.S. Attorney’s Office for the Western District of Pennsylvania announced the settlement on Wednesday with Hamot and Medicor Associates, Inc., a regional cardiology practice.

The settlement stems from a lawsuit filed under the False Claims Act alleging that the entities “knowingly violated the Anti-Kickback Statute and the Physical Self-Referral Law.”

The Anti-Kickback Statute, according to the DOJ, “prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs” while the Physician Self-Referral Law “prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation arrangement.”

The Pittsburgh Post-Gazette reported that the settlement money would help offset Medicare’s loss, which was estimated at more than $50 million.

“Worried about increasing competition for patients from rival St. Vincent Hospital, the former Hamot Medical Center between 2004 and 2010 is alleged to have created sham directorships for doctors at Medicor Associates… , according to court records,” the Post-Gazette reported. “Medicor was a physician-owned practice and the doctors were allegedly paid millions of dollars as incentives to refer patients to Hamot for a range of heart procedures.”

The DOJ said the law is designed to “ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.”

A whistleblower action was filed under the False Claims Act that alleged the violations between 1999 and 2010, before Hamot became affiliated with the University of Pittsburgh Medical Center.

The allegations were that “Hamot paid Medicor up to $2 million per year under 12 physician and administrative service arrangements which were created to secure Medicor patient referrals. Hamot allegedly had no legitimate need for the services contracted for, and in some instances the services either were duplicative or were not performed.”

The lawsuit was filed by a former Medicor doctor, Dr. Tullio Emanuele. According to the DOJ, The law permits “private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to share in any recovery.” The case was set for trial “when the United States helped to facilitate the settlement. Dr. Emanuele will receive $6,017,500.”

The U.S. Attorney’s Office for the Western District of Pennsylvania was involved in the case as was the Justice Department’s Civil Division and the Department of Health and Human Services Office of the Inspector General.