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UPMC to pay $38 million to settle whistleblower lawsuit

Pittsburgh, PA (May 10, 2024) - UPMC will pay $38 million to settle a 12-year-old whistleblower lawsuit that alleged that some of its surgeons were doing unnecessary or overly complex operations to increase their earnings and enrich system hospitals.

The Pittsburgh hospital system did not admit wrongdoing in agreeing to the settlement.

Former UPMC neurosurgeon J. William Bookwalter, neurophysiologist Robert Sclabassi and surgical technologist Anna Mitina had filed suit against UPMC and 13 staff neurosurgeons who they alleged received bonus pay based on the number of procedures performed at the expense of Medicare. 

The three plaintiffs will receive $11 million or 29% of the total amount to be paid by UPMC, according to plaintiff lawyers. The government will claim the balance.

UPMC had argued in court papers responding to the suit that its surgeon compensation packages of base pay plus productivity bonuses were standard at medical centers across the U.S. Patient referrals were not part of the formula, the health system said.

In a statement issued Thursday, spokesman Paul Wood said, “UPMC is pleased to have resolved this matter, twelve years after it first started. The settlement, which includes no admission of liability, allows UPMC to keep its focus where it belongs — on providing world-class care to our patients.”

In most cases, the Stark Law, which is actually a group of federal laws, prohibit doctors from referring Medicare or Medicaid patients to entities in which the physicians have a financial relationship.

“The Stark Law was enacted to ensure that the clinical judgment of physicians is not corrupted by improper financial incentives,” plaintiff attorney Mark Simpson, of Fayetteville,  Georgia-based Simpson Law Firm LLC, said in a prepared statement.

In addition to Simpson Law, the plaintiffs were represented by the Stone Law Firm LLC, Del Sole Cavanaugh Stroyd LLC and Morgan Verkamp, LLC.

The $38 million settlement is believed to be among the biggest false claim recoveries where the Justice Department declined to intervene, according to plaintiff attorneys. The lawsuit was filed under seal in 2012 before UPMC settled some of the false claim allegations in 2016 by paying the government $2.5 million.

The plaintiffs continued to pursue the three-count civil lawsuit in the U.S. District Court for the Western District of Pennsylvania over claims not addressed in the 2016 settlement with the government.

Whistleblower, or qui tam lawsuits, date from the Civil War, when the government set up a legal way to reward ordinary citizens for exposing government fraud by sharing the funds that are recovered. The False Claims Law specifically prohibits retaliation against employees, contractors and others who report fraud involving government agencies.

Kris B. Mamula: 

First Published May 9, 2024, 7:38pm

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