WASHINGTON (Legal Newsline) — The U.S. Department of Justice announced March 7 that UPMC Hamot (Hamot), an Erie, Pennsylvania, hospital that is affiliated with the with the University of Pittsburgh Medical Center (UPMC), and Medicor Associates Inc. (Medicor), a regional physician cardiology practice, will pay $20.75 million after allegations of kickbacks and improper financial relationships.

“Financial arrangements that improperly compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” Chad A. Readler, acting assistant attorney general and head of the Justice Department’s Civil Division, said in a statement. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”

According to allegations, Hamot paid Medicor up to $2 million per year for wholly unnecessary services in order to secure Medicor patient referrals. Such alleged conduct violates the Anti-Kickback Statute and the Physician Self-Referral Law.

“Federal law prohibits physicians from entering into financial relationships that may affect their medical judgment and drive up health care costs,” said U.S. attorney Scott W. Brady. “[This] settlement demonstrates our commitment to ensuring that health care decisions are made based exclusively on the needs of the patient, rather than the financial interests of health care providers.”

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