UPMC to pay $8.5 million to settle federal false claims case

UPMC will pay the federal government $8.5 million to settle a federal false claims case filed in 2021 against the hospital system and star surgeon James Luketich over his practice of performing and billing for “concurrent” surgeries, the U.S. Department of Justice announced Monday.

Although the agreement allows Luketich, UPMC and its sister organization, University of Pittsburgh Physicians, to not admit liability in the case, part of the agreement mandates that a “corrective action plan” be created to oversee Luketich’s billing services to Medicare for a year.

The agreement also notes the government does not concede that its claims in the lawsuit “are not well founded,” and $3.35 million of the $8.5 million UPMC will pay is for “restitution.”

However, the agreement states that both sides are resolving the case to “to avoid the delay, uncertainty, inconvenience and expense of protracted litigation of the above claims ….”

Acting U.S. Attorney for the Western District of Pennsylvania Troy Rivetti said in a news release statement: “This is an important settlement and a just conclusion to the United States’ investigation into Dr. Luketich’s surgical and billing practices, and UPMC and UPP’s acceptance of those practices. This Office is committed to safeguarding the Medicare and Medicaid programs, and to protecting those programs’ beneficiaries. No medical provider — however renowned — is excepted from scrutiny or above the law.” 

FBI Pittsburgh Special Agent in Charge Mike Nordwall in a statement highlighted the scrutiny Luketich will be under in the agreement: “The Complaint alleged that Dr. Luketich used his position as a trusted doctor to defraud the health care system. Health care fraud costs our country billions of dollars each year. This money is not just absorbed. It is passed down to the consumer. The Settlement Agreement provides that UPMC will implement a Corrective Action Plan for Dr. Luketich, and he will now have to undergo close scrutiny of his work.”

UPMC and Luketich were adamant in the months after the case was first filed that Luketich never violated Medicare’s billing rules when he was performing concurrent surgeries and billing for them. But UPMC and the federal government have been negotiating a settlement ever since Judge Cathy Bissoon in June of 2022 denied UPMC’s motion to dismiss the case.

“We’re pleased this settlement puts an end to the government’s case,” Luketich’s lead attorney, Efrem Grail, said in a statement. “Medical schools and their hospitals have sought clarity about the billing regulation for teaching physicians at issue here for years, and the United States has never provided it. This settlement provides a mechanism we hope will lead to authoritative guidance so that universally respected surgeons like Dr. Luketich can return their focus to training young doctors to save lives without having to put up with baseless claims of fraud.”

Not yet known in the lawsuit is how much of the $8.5 million that the whistleblower in the case — former UPMC surgeon Jonathan D’Cunha — will get as his share. Federal statutes allow false claims whistleblowers to recover anywhere from 15% to 25% of the money recovered in a case where the federal government intervenes, as it did in this case.

D’Cunha’s attorneys and the federal government will negotiate the amount, though it’s not clear when that will be finalized. A spokeswoman for the Department of Justice referred questions on that to D’Cunha’s attorneys, who did not immediately return a call.

The lawsuit was originally filed under seal in April 2019 by D’Cunha, a former colleague of Luketich in UPMC’s cardiothoracic surgery department.

D’Cunha alleged Luketich routinely performed multiple concurrent surgeries — sometimes as many as three at the same time — and then billed Medicare for all of those surgeries even though he was not able to be available for all two or three surgeries’ critical events, which would be a violation of Medicare rules.

The lawsuit became public in September 2021 when the federal government joined D’Cunha’s case after its own two-year investigation alleged similar violations of Medicare rules.

The federal government’s original complaint also took up some of D’Cunha’s allegations that Luketich used suboxone to address an opioid addiction and that drug use was affecting his ability to do surgery. But the federal government later dropped those allegations in an amended complaint.

While Luketich openly admits to using suboxone, he denies it has affected his surgical work, and he is engaged in a separate medical malpractice case in Allegheny County Common Pleas Court that has been debating his suboxone use for most of the past year.

The state case was originally filed by Paul and Bernadette Fedorka, of Aliquippa, alleging that she suffered a botched lung transplant in 2018 at UPMC. Though Luketich did not perform the surgery, the Fedorkas’ lawsuit alleges it was his use of suboxone that led to a series of poor management decisions that ultimately resulted in the botched lung transplant.

Luketich countersued D’Cunha last year in the state case, as well as another former UPMC colleague, surgeon Lara Schaheen, accusing them of improperly taping a private conversation Luketich had in a room at UPMC with a physician who prescribes him suboxone. That case is still ongoing, and there could be a decision to make the taped conversation public in the next few weeks.

Doug Hanto, a former transplant surgeon and now co-chairman of the Surgical Ethics Working Group at the Center for Bioethics at Harvard Medical School, said the combination of the payment in the federal lawsuit along with the oversight of Luketich’s billing “seems like quasi-justice.”

The $8.5 million for UPMC — it had $26 billion in revenue in 2022 — “probably, for them, is not a lot of money,” he said.

And the oversight of Luketich — likely checking that he is in each surgery that he bills for every time — “is probably something they’re already doing with him” in the wake of the filing of the federal lawsuit in 2021, Hanto said.

Even though the settlement includes a clause that says UPMC admits no liability and denies the lawsuit’s claims, “this really is an admission of wrongdoing and tells us that UPMC wants to put this behind them.”