UPMC Hamot and a regional physician cardiology practice have agreed to pay the government $20.75 million to settle a lawsuit, the U.S. Department of Justice announced Wednesday.

It alleges the parties knowingly submitted claims to Medicare and Medicaid that violated the Anti-Kickback Statute and Physician Self-Referral Law. This happened before Hamot affiliated with UPMC, according to the Department of Justice.

A whistleblower action alleged from 1999 to 2010, Hamot paid Medicor up to $2 million per year under 12 physician and administrative services arrangements. The arrangements were created to secure Medicor patient referrals. The allegations claimed Hamot had no need for the services contracted for, and the services were duplicative or not performed in some cases.

“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.  “Today’s 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.”

Both the Anti-Kickback Statute and the Physician Self-Referral Law, also known as the Stark Law, were implemented to ensure a physician’s medical judgment is based on the best interests of the patient and not compromised by improper financial incentives.

The case was set for trial, but the Department of Justice helped to facilitate the settlement. The U.S. District Court for the Western District of Pennsylvania ruled two of Hamot's agreements with Medicor violated the Physician Self-Referral Law on March 15, 2017.

Dr. Tullio Emanuele, who worked for Medicor from 2001 to 2005, filed the lawsuit under whistleblower provisions. He will receive $6,017,500.

This is a developing story. Check back later for more details.

Copyright 2018 Erie News Now. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.