In The News

Two Health Care Providers Agree to Pay More than $20 Million to Settle Alleged False Claims Act Violations

The government’s crackdown on fraud has put the spotlight on the Anti-Kickback statute and others laws that are designed to maintain the integrity of the healthcare system. Thus earlier this month, the Justice Department announced that UPMC Hamot (Hamot) a Pennsylvania-based hospital affiliated with the University of Pittsburgh Medical Center (UPMC) and Medicor Associates, Inc. (Medicor), a cardiology practice, have agreed to pay $20.75 million to settle a False Claims Act lawsuit. The government alleges that the UMPC and Medicor knowingly submitted false claims to Medicare and Medicaid and that they violated the Anti-Kickback Statute.

The Anti-Kickback Statute (42 U.S.C. § 1320a-7b) prohibits offering, paying, soliciting or receiving remunerations to induce the referral of items and/or services covered by Medicare or any other federally funded program. The Physician Self-Referral Law (42 U.S. Code § 1395nn) – which Medicor and Hamot have also been alleged to have violated – prohibits hospitals from billing Medicare for services referred by physicians whom the hospital has an improper compensation arrangement. Both laws are intended to ensure that medical decisions are made on the basis of patient need and not upon financial incentives.

“Federal law prohibits physicians from entering into financial relationships that may affect their medical judgment and drive up health care costs,” said U.S. Attorney Scott W. Brady. “Today’s settlement demonstrates our commitment to ensuring that health care decisions are made based exclusively on the needs of the patient, rather than the financial interests of health care providers.”

The settlement sprung from a whistleblower action filed under the False Claims Act. Under the whistleblower provisions of the False Claims Act, private parties are able to sue for false claims with or without a false claims act lawyer and to share in any recovery. (A qui tam lawyer handles cases involving whistle blowing as it relates to the False Claims Act.) The original lawsuit alleged that from 1999 to 2010, Hamot paid Medicor 2 million per year to secure patient referrals. Some of these services were either repeated or were not performed.

“Financial arrangements that improperly compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.” The whistleblower in this case is Dr. Tulio Emanuele. Emanuele worked for Medicor from 2001 to 2005. In March of last year the U.S. District Court for the Western District of Pennsylvania ruled that Hamot’s arrangements with Medicor did indeed violate the Physician Self-Referral Law (also known as the Stark Law). Dr. Emanuele will receive $6,017,500 as his share of the settlement.