The University of Pittsburgh Medical Center (UPMC) recently reached a $38 million settlement, resolving a 12-year-old whistleblower case initially brought by three UPMC clinicians. In the original filing, the plaintiffs alleged that UPMC and 13 of its neurosurgeons falsely milled Medicare for medically unnecessary or complex procedures.
According to the relators, UPMC incentivized neurosurgeons to perform their procedures at UPMC facilities by providing base pay and productivity bonuses, in excess of “fair market value.” The whistleblowers indicated that the arrangement not only led to higher compensation for the neurosurgeons, but also increased revenue for the hospital system.
The complaint alleged that the neurosurgeons submitted claims for assisting with or supervising surgical procedures that were actually performed by other surgeons, residents, fellows, or physician assistants, with the neurosurgeon not participating in the surgeries to the degree required. One neurosurgeon also allegedly submitted claims to Medicare for levels of spinal decompression not actually performed in a multi-level spinal surgery.
The United States Department of Justice (DOJ) partially intervened in the case, settling claims relating to physician services in 2016, in which UPMC paid more than $2.5 million to resolve those related allegations. The DOJ declined to intervene in this recently-settled portion of the litigation. The whistleblowers will receive roughly $11 million of the settlement, with the government receiving the remaining $27 million.
The claims that the DOJ did not intervene included claims surrounding the Stark Law, under which hospitals are precluded from submitting claims to Medicare and Medicaid for services furnished under referrals from physicians who have a financial relationship with the hospital, barring statutory exceptions. According to Morgan Verkamp, LLC, one of the firms representing the plaintiffs, the $38 million settlement is believed to be one of the largest Stark Law recoveries in a False Claims Act case where the United States declined to intervene.
“The Stark Law was enacted to ensure that the clinical judgment of physicians is not corrupted by improper financial incentives,” said Mark Simpson, of Simpson Law Firm. “Patients need and deserve to know that the hospital services they receive are the product of sound medical judgment, rather than motivated by the physician’s financial interests,” noted Steve Del Sole, of Del Sole Cavanaugh Stroyd.
“Whistleblowers play a critical and indispensable role in helping the government recover money that was improperly obtained, and this case is an excellent example of the impact of the whistleblower provisions of the federal False Claims Act, which empowers ordinary citizens to step forward, report fraud, and recover stolen funds on behalf of the United States,” said Jennifer Verkamp, of Morgan Verkamp LLC.
Prior UPMC Settlement
This settlement follows a 2023 $8.5 million settlement in which UPMC and University of Pittsburgh Physicians resolved allegations that its former chair of cardiothoracic surgery, James Luketich, MD, was fraudulently billing for (and performing) simultaneous surgeries. That settlement also included promises by UPMC to create a Corrective Action Plan for the doctor, along with a year-long, third-party audit of his physician fee service billings to Medicare.