Court revives whistleblower lawsuit against UPMC neurosurgeons

An appellate court is backing the reinstatement of a lawsuit filed by three former UPMC employees claiming the health system's neurosurgeons violated the Stark Law and the Anti-Kickback Statute, according to the Pittsburgh Post-Gazette.

The whistleblowers — a neurosurgeon, physician and operating room technician all formerly employed by Pittsburgh-based UPMC — claim the health system offered bonuses of nearly 30 percent to neurosurgeons who exceeded a certain number of billable medical procedures. The lawsuit alleges UPMC neurosurgeons inflated the number of spine operations they performed and delivered needlessly complex medical care to bolster their earnings, which ranged up to $4 million in annual salary some years, and increased patient referrals to UPMC hospitals.

UPMC has said its compensation model was created by Medicare, the bonuses are an industry practice nationwide and high salaries for neurosurgeons were due to their skill and demand in the marketplace, according to the Post-Gazette.

The whistleblowers filed the original claim in 2012 on behalf of the United States against UPMC, their subsidiary University of Pittsburgh Physicians and the neurosurgeons. It was unsealed in 2016, and the U.S. Justice Department settled certain claims with UPMC that same year for $2.5 million. The plaintiffs continued their pursuit of remaining claims without government involvement.

Their civil lawsuit was dismissed in 2018 by U.S. District Court for the Western District of Pennsylvania Judge Cathy Bissoon. In September, a three-judge panel of the appellate court ruled that the case had merit and ordered reinstatement, which UPMC appealed for a second review. Now the Third Circuit Court of Appeals has upheld reinstatement of the lawsuit.

"With all this smoke, a fire is plausible," noted the Third Circuit in its September ruling. "So this case deserves to go to discovery. Once the discovery is in, it may turn out that there is no fire. We do not prejudge the merits. But this is exactly the kind of situation in which the Stark and False Claims Acts seek to shed light."

The Stark Law governs physician self-referral for Medicare and Medicaid patients; it is strict liability and does not factor the intent of the parties. The Anti-Kickback Statute prohibits the offer or receipt of compensation in exchange for referrals or services that are reimbursable under Medicare or Medicaid; intent is a key element of liability under the statute. Claims for items or services resulting from a violation of the Stark Law or Anti-Kickback Statute constitutes a false claim under the False Claims Act.

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