Hamot Hospital, a University of Pittsburgh Medical Center (UPMC) affiliate, and Medicor Associates Inc., a regional physician cardiology group practice, will pay the U.S. government $20.75 million to settle claims that they violated the Stark Law on physician self-referrals and the Anti-Kickback Statute.

This case was brought by a physician whistleblower – and former Medicor employee – under the federal False Claims Act. He alleged that from 1999 to 2010 Hamot was paying Medicor up to $2 million per year for services meant to ensure Medicor’s referrals to their hospital. Per the allegations, Hamot had no legitimate need for the services and they either were duplicative or not performed at all.

The allegations surrounded Medicor’s provision of medical directorship arrangements to Hamot. The court analyzed whether the relationship was meant to secure referrals or had a legitimate purpose. The determination was largely based on the fair market value of the services and whether the relationship complied with the Personal Services Arrangement exceptions to the Stark Law.

Since the Stark Law is based on strict liability, the exceptions tend to be narrow and the agreements made between entities must be closely tailored to those exceptions. In this case the court found that the parties had followed exceptions with respect to some, but not all, of the agreements.

The opinion is dated March 15, 2017, and the parties announced their settlement one year later. The case was set for appeal when the settlement was announced.

The qui tam plaintiff – the physician whistleblower who brought this case under the FCA – will receive approximately $6 million.
 

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