Prosecutors, UPMC agree to $8.5M settlement

Deal reached in massive fraud case involving surgeon

More than a year after federal prosecutors accused UPMC and a star surgeon of engaging in a massive fraud scheme that put profits before safety and falsely billed the government for millions of dollars, the giant hospital system agreed to pay $8.5 million in a settlement, the Department of Justice announced Monday.

UPMC also promised to allow a third-party audit of Dr. James Luketich’s Medicare billing practices, which were at the heart of the Department of Justice’s two-year investigation and subsequent 2021 lawsuit.

Prosecutors accused the well-known doctor — a top moneymaker for UPMC — of routinely performing numerous surgeries at the same time, skipping key portions of the operations and severely harming patients by keeping them under anesthesia hours longer than necessary.

Two of the cases led to amputations — portions of a hand in one case and a lower leg in the other, prosecutors said.

“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 ’s acceptance of those practices,” acting U.S. Attorney Troy Rivetti said. “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.”

Federal law bars teaching physicians such as Luketich from billing the government for concurrent surgeries — something that was “well known to UPMC leadership, and increased the risk of surgical complications to patients,” the Justice Department said in a statement Monday.

“The complaint alleged that Dr. Luketich used his position as a trusted doctor to defraud the health care system,” FBI Pittsburgh Special Agent in Charge Mike Nordwall said in the statement. “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.”

As part of the settlement, UPMC doesn’t admit to wrongdoing — but neither do federal investigators exonerate the Pittsburgh health system and its surgeon, according to a statement from the Department of Justice.

Paul Wood, a spokesperson for UPMC, said the institution, the state’s largest private employer, agreed to pay the millions “to the government to avoid the distraction and expense of further litigation,” but that the institution believes Luketich’s surgical practices met government requirements.

Luketich’s lawyer, Efrem Grail, said medical schools and hospitals have for years sought “clarity” about Medicare billing rules for teaching physicians, and called claims of fraud “baseless.”

“We’re pleased this settlement puts an end to the government’s case,” Grail said.

While the settlement might end the federal probe, a related case — one that has unfolded into one of the biggest scandals to engulf the hospital system in a generation — continues, with some of the same key players battling it out in court.

Luketich is a key defendant in a medical malpractice case in Allegheny County Common Pleas Court that includes many of the same allegations against the prominent surgeon — including his practice of carrying out multiple surgeries at the same time.

That case has for months focused on a secret recording of Luketich and his physician discussing Luketich’s prescription for suboxone, a drug used to treat chronic pain and opioid addiction.

Luketich, the longtime head of UPMC’s department of cardiothoracic surgery, accused former colleagues Dr. Jonathan D’Cunha and Dr. Lara Schaheen of illegally making the recording as part of a vendetta against him for exposing research misconduct and an affair between the two physicians — something the pair denies.

Lawyers have battled fiercely — and often in a courtroom often closed to the public by Judge Philip Ignelzi — over whether that 2018 recording and its transcript should be made public. Luketich and UPMC argue that it was an illegal wiretap that should never be revealed, while their opponents say Luketich and his physician were openly talking in a well-traveled room with the door open.

At the heart of the case is a botched lung transplant performed by surgeons in Luketich’s unit on Bernadette Fedorka, of Aliquippa, who filed the malpractice suit.

Dangerous complications followed Ms. Fedorka’s

March 9, 2018, operation, including a 4-inch piece of wire left in her neck. Other after-effects required at least eight follow-up procedures, according to court records.

Luketich didn’t operate on Fedorka directly, but she and her husband, Paul, allege his decisions as chair of the cardiothoracic department contributed to the bungled surgery. In particular, they say he shifted critical resources away from the lung transplant program into his own thoracic specialty, leaving the lung transplant program understaffed.

Driving those decisions was, in part, Luketich’s “use of suboxone,” according to the lawsuit. The Fedorkas want to include the taped conversation between Luketich and his doctor as part of their evidence as the trial moves forward, something Luketich and UPMC fiercely oppose.

Luketich and UPMC have denied any wrongdoing.