UPMC Hamot and Medicor: Services Agreements and Work the Hospital Did Not Need

UPMC Hamot and Medicor agreed to a $20.75 million settlement over alleged hospital kickbacks disguised as payments for physician and administrative services. The hospital allegedly paid a cardiology practice for work it did not need and, in some instances, never received. For someone inside that practice, the important question was what the hospital was really buying when it paid for the work.

The Justice Department announced the settlement on March 7, 2018. Hamot was an Erie, Pennsylvania hospital, and Medicor Associates Inc. was a regional cardiology practice. Hamot became affiliated with UPMC after the conduct covered by the settlement.

What the Twelve Agreements Allegedly Bought

The whistleblower’s lawsuit alleged that Hamot paid Medicor up to $2 million a year from 1999 through 2010 under twelve physician and administrative services arrangements created to secure patient referrals. It also alleged that Hamot and Medicor knowingly submitted claims to Medicare and Medicaid that violated the Anti-Kickback Statute and the Stark Law.

Hamot allegedly had no legitimate need for the contracted services. Some of the work duplicated other services, and some was never performed. On paper, the payments purchased work. In the lawsuit’s account, they purchased access to the practice’s patients.

Why keep paying for work the hospital did not receive? The lawsuit pointed to the patient referrals Hamot wanted from Medicor.

Two Hamot Arrangements Violated the Stark Law

The Justice Department reported that the federal court in the Western District of Pennsylvania found two Hamot-Medicor arrangements violated the Stark Law in 2017. The later settlement resolved the broader False Claims Act allegations about the services payments and referrals.

The alleged exchange of payments for health care referrals is the concern behind the Anti-Kickback Statute. Here, the complaint challenged whether the services contracts bought any needed work at all.

What the Amended Complaint Alleged About the Directorships

The whistleblower’s amended complaint alleged that Hamot created six medical-director positions that had not previously existed in response to a threatened loss of cardiology revenue. It argued that the new positions suggested the hospital either did not need much of the contracted work or already received it from physicians who were not being paid for it.

That is a more specific allegation than excessive physician pay. The complaint questioned why the jobs existed. It also alleged that Hamot paid Flagship CVTS physicians through medical directorships and similar services contracts. The complaint stated the alleged purpose plainly:

The same complaint alleged that Medicor physicians served as admitting physicians for referring doctors who lacked admitting privileges at Hamot, regardless of the patient’s medical condition. That detail connects the alleged payments to an operational practice: how patients from those referring doctors entered the hospital.

The complaint’s account runs from a threatened revenue stream, to newly created positions, to payments allegedly intended to keep referrals coming. For a physician who knew what those directorships actually required, the work itself could tell a different story from the contract.

A Physician Inside Medicor Brought the Case

A physician who worked for Medicor from 2001 to 2005 brought the qui tam case. The whistleblower worked for the practice receiving the hospital’s payments. That position matters in a dispute over whether the paid duties existed and whether anyone performed them.

The whistleblower pursued the case without the United States taking it over. When the case was set for trial, the government helped the parties reach the settlement. The physician received about $6 million from that settlement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Why a Hospital Services Contract Can Become a Referral Question

A physician’s value to a hospital extends beyond the work the physician personally performs. Referrals bring admissions, imaging, laboratory work and surgery. The hospital can earn healthcare revenue from the services that follow a physician’s decision about where a patient should receive care.

That helps explain the economic attraction of a relationship with a cardiology practice. A payment described as compensation for administrative work can serve another business purpose if it secures the patients who generate hospital revenue. In the Hamot complaint, the whistleblower alleged exactly that connection: the directorships followed a threatened loss of cardiology business.

A study in the Journal of Forensic and Investigative Accounting, Types of Hospital Frauds: Nature and Methods of Prevention, published in 2023, examined 80 hospital-fraud cases drawn from Justice Department announcements. Illegal patient referrals accounted for 16 cases. The paper describes supposed consulting, rental-space and bill-collection services used to conceal referral payments:

The paper’s practical distinction is between a contract’s description and evidence that the service happened. It points to consulting deliverables and meetings, use of rented space, and evidence of collection efforts. A payment can carry an ordinary business label while the work behind that label is missing. The paper also identifies the patient’s stake: a referral made for money can put the financial relationship ahead of the patient’s interests.

Hudson Valley’s Payments Continued Despite Incomplete Work

The New York-Presbyterian Hudson Valley settlement supplies a close parallel involving an oncology practice. The government’s complaint alleged that the hospital paid for services the practice had not performed or documented, including payments after the agreements had ceased operating.

In the settlement announced December 22, 2025, the hospital admitted paying for work that was not performed, was not performed as the agreements required, or lacked time records. It also admitted continuing fees after it was, or should have been, aware of incomplete work. The Justice Department said referrals from the oncology practice generated reimbursements from Medicare and Medicaid. Taxpayers paid for the care that followed those referrals.

The connection to Hamot is the gap between paid duties and actual work. Hamot’s whistleblower alleged that the hospital did not need some services and did not receive others. Hudson Valley admitted specific failures in the work and its documentation.

Your View From Inside the Practice

If you know why a hospital kept paying for duties nobody needed or work nobody performed, speak with our whistleblower experts about those payments. We build your strongest case around what you know about the work and the referrals, bring in whistleblower lawyers who understand hospital physician-compensation cases, and stay beside you through the case’s resolution.