A Pennsylvania hospital and cardiology group have agreed to pay the government $20.75 million to settle a False Claims Act lawsuit alleging that they knowingly submitted claims to the Medicare and Medicaid programs that violated the Anti-Kickback Statute and the Physician Self-Referral Law, the Department of Justice (DOJ) announced recently.

The settlement involves University of Pittsburgh Medical Center Hamot, a hospital based in Erie, PA, and now affiliated with Medicor Associates, a regional physician cardiology practice.

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

The DOJ announced that the settlement resolves allegations brought in a whistleblower action filed under the False Claims Act alleging that, from 1999 to 2010, “Hamot paid Medicor up to $2 million per year under 12 physician and administrative services 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.”

Acting Assistant Attorney General Chad A. Readler, JD, head of the DOJ’s Civil Division, said. “Financial arrangements that improperly compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs. The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”

DOJ reports that the lawsuit was filed by a physician who worked for Medicor from 2001 to 2005, under the qui tam, or whistleblower, provisions of the False Claims Act, which 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 U.S. District Court for the Western District of Pennsylvania held that two of Hamot’s arrangements with Medicor violated the Stark Law and the case was set for trial when the United States helped to facilitate the settlement. The whistleblower physician will receive $6,017,500.

The lawsuit is available online at: http://bit.ly/2p9D1VI.