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S.C. Hospital Fined $276.7M for Medicare Fraud

Tuomey's referral-based physician contracts sought to keep cases out of ASCs.

Published: October 4, 2013

A South Carolina hospital that recruited physicians in order to prevent them from taking their cases to local ASCs has been ordered to pay $276.7 million in fines and penalties for Medicare fraud, according to a federal court's ruling.

The federal lawsuit stemmed from a whistleblower action filed 8 years ago by an orthopedic surgeon who had been approached by Sumter-based Tuomey Healthcare System with such an arrangement.

Michael Drakeford, MD, and later the U.S. Department of Justice, accused the hospital of signing 19 area physicians to exclusive, part-time contracts between 2005 and 2009, which paid them based on their referral volumes.

These arrangements, a federal jury concluded in May of this year, violated the Stark Law against self-referral and constituted Medicare fraud. The court's judgment, issued Sept. 30, included a $39.3 million fine for the false Medicare claims and $237.4 million in penalties for violating the federal False Claims Act. It also denied Tuomey's request for a new trial. Hospital officials have announced plans to appeal the judgment and, if it is overturned, possibly negotiate a settlement.

The ruling follows last week's departure of 2 Tuomey executives: Jay Cox, the hospital's president and CEO, and Gregg Martin, its executive vice president and chief operating officer. The pair negotiated confidential exit agreements.

Tuomey's spokesperson and Dr. Drakeford did not immediately return calls seeking comment.

David Bernard

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