Erie's UPMC Hamot settles lawsuit for $20.7 million
Claims, made before hospital’s affiliation with UPMC, concerned financial relationship with a cardiology practice.
Erie, PA -A $20.7 million settlement has ended a long-running federal lawsuit over patient referrals and claims of kickbacks involving an Erie cardiology practice and UPMC Hamot.
Hamot and the practice, Medicor Associates Inc., have agreed to pay $20.7 million, most of which will go to the federal government because the suit involved Medicare and Medicaid payments, a lawyer for the plaintiff said.
The plaintiff, Tullio Emanuele, M.D., practiced with Medicor from 2001 to 2005. He contended that Hamot violated federal law between 2004 and 2010 by submitting claims, primarily to Medicare, while the hospital was paying millions of dollars a year to Medicor, an independent physician-owned group that remains in business.
Emanuele claimed the arrangement was improper, and that its purpose “was, at least in part, to induce Medicor to refer or recommend the referral of patients to Hamot,” according to court records.
According to the records, Emanuele also claimed Hamot pursued a relationship with Medicor because, in the late 1990s, Hamot “was hemorrhaging market share to a competing hospital, St. Vincent’s, which was building referral relationships with physicians in the region.”
Emanuele sued his former practice under the federal anti-kickback law and the federal Stark Act. The act bans a hospital from submitting a claim to the federal government for services that were prescribed by a physician who has an improper financial relationship with the hospital.
Emanuele also sued as a whistleblower under the federal False Claims Act. It allows citizens to sue on behalf of the government over allegations of fraud and other misuses of federal money.
The case settled for $20,750,000, said Pittsburgh lawyer Andrew Stone, whose firm represents Emanuele, now of Kentucky. UPMC spokeswoman Susan Manko said UPMC cannot comment on the case.
As the whistleblower in the case, Emanuele will receive 25 to 30 percent of the settlement amount, with the federal government to receive the rest, Stone said. The Justice Department must sign off on the settlement under the procedures in the False Claim Act.
Emanuele claimed Medicare lost more than $50 million because of what he said were thousands of false claims, according to court records. The government’s share of the settlement will help cover those losses.
Medicor and Hamot denied the claims in the suit, which was filed in 2010, a year before Hamot became affiliated with the University of Pittsburgh Medical Center. UPMC Hamot was previously known as Hamot Medical Center.
Five individual Medicor cardiologists were originally named as defendants but were dismissed from the case earlier this year and in 2013.
In addition, Emanuele in 2016 withdrew his original claims that the Medicor cardiologists performed unnecessary surgeries, mainly to insert heart stents, to make more money for their practice and Hamot.
The case was scheduled to go to trial in U.S. District Court in Erie on Nov. 8. A main remaining issue was whether Hamot created lucrative and improper “medical directorships” with the Medicor physicians that led them to refer patients to the hospital, according to court records.
Emanuele claimed, among other things, that the contracts pertaining to the medical directorships were flawed because they were not in writing at all times, as federal law requires.
The parties reached the settlement on Nov. 7, according to an order from Chief U.S. District Judge Joy Flowers Conti, who is based in Pittsburgh but was to preside over the trial in Erie. The trial was expected to last six weeks to eight weeks.
If the case had gone to trial, Stone said he and other lawyers for Emanuele were prepared to show the “corrupting influence of money” on the relationship between Hamot and Medicor. He said the Stark Act and other laws central to the suit are designed to ensure that “referral decisions are made based on the welfare of the patient” rather than on “the financial interests of the doctors.”
Referring to the False Claims Act, Stone said the Medicor case “is a good example of how this particular law works as a public-private partnership with the government.” Stone said he was confident in his case but said “there is always a risk” in going to trial, and the settlement eliminated any uncertainty.
If Hamot and Medicor would have lost at trial, the financial penalty would have been much larger than $20.7 million. The False Claims Act imposes a civil penalty of between about $5,000 and $10,000 for each false claim and triple the amount of the government’s damages.
Also representing Emanuele were the Simpson Law Firm, of Fayetteville, Georgia, and the law firm of Morgan Verkamp, of Cincinnati, Ohio. Those representing Hamot were Pittsburgh lawyer Stephen Stallings, the Pittsburgh law firm of Burns White and the Erie law firm of Knox, McLaughlin, Gornall & Sennett.
A lawyer for the Knox firm on the case, Neal Devlin, declined to comment pending the final approval of the deal from the Justice Department, including the U.S. Attorney’s Office in Pittsburgh. A spokeswoman for the U.S. Attorney’s Office in Pittsburgh said the office will comment at a later date.
The individual cardiologists originally named as defendants in the case are Richard W. Petrella, M.D.; Robert J. Ferraro, M.D.; Charles M. Furr, M.D.; and Timothy C. Trageser, M.D. Judge Conti dismissed them as defendants in March. Another cardiologist, Donald Zone, M.D., was dismissed as a defendant in 2013.