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Stark Violations Might Cost Tuomey Healthcare System $357M

South Carolina jury finds improper referrals resulted in 22,000 false claims.

Published: May 15, 2013

Tuomey Healthcare System has been found guilty by a jury of violating the Stark Law "by illegally paying referring physicians" for nearly 22,000 false claims that resulted in more than $39 million worth of overpayments, says a bulletin from the healthcare department of law firm Waller. This is the second time Tuomey has faced monetary penalties. This time, the firm says, Tuomey may face "up to $357 million in potential liabilities."

As Outpatient Surgery Magazine previously reported, the charges against Sumter, S.C.-based Tuomey Healthcare System were brought by orthopedic surgeon Michael Drakeford, MD, on behalf of the government in a whistleblower lawsuit. The suit alleged that Tuomey made contracts with 19 part-time surgeons on its staff that based salaries and bonuses on the physician fees brought in, effectively tying referrals to payments — an arrangement that went on for 5 years. A jury initially found that the contracts violated Stark Law prohibitions against physician self-referrals and resulted in claims that constituted Medicare fraud.

Based on that decision, a judge fined Tuomey $45 million. However, the appellate circuit court vacated the findings and fine last year, setting in motion the journey to another jury trial. It took the jury less than 5 hours to convict Tuomey on violations of the Stark Law and False Claims act, according to Waller, which further reports that "Defense counsel for the hospital stated that Tuomey will be evaluating its options in light of the jury's verdict."

Stephanie Wasek

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