Tuomey Healthcare System Ordered to Pay Over $237 Million for Stark Law and False Claims Act Violations

Earlier this month, a judge ordered Tuomey Healthcare System (“Tuomey”) to pay $237.5 million, after a jury found that the company violated the Stark Law and the False Claims Act.   The Tuomey case was filed in 2005.  As we wrote in July, Tuomey lost a jury verdict in 2010 and faced a $45 million judgment.  However, Tuomey appealed, and that verdict was overturned in 2012 by the Fourth Circuit Court of Appeals.  The case was re-tried earlier this year with a jury finding against Tuomey in May and the $237 million judgment entered as a result of that verdict.  Tuomey intends to appeal this latest jury verdict as well.

The facts of the Tuomey case stretch back to 2003, when physicians groups informed Tuomey that they were considering performing outpatient procedures in-office or relocating procedures, rather than performing those procedures at Tuomey’s hospital.  Hospitals are able to bill private insurers and government programs, such as Medicare and Medicaid, for a “facility fee” when procedures are performed on-site.  In light of the potential financial hardship that would be imposed on Tuomey by the physician groups moving their procedures, the company sought out physicians to enter into part-time employment contracts requiring those physicians to perform procedures at their hospital.  Purportedly, these contracts paid the phyisicans more than fair market value for their services.  Bonuses in the contracts for the phyicians depended on Tuomey’s reimbursements for the procedures.

In general, the Stark Law prohibits physician referrals involving Medicare and Medicaid patients when the referring physician and the referred entity have a financial relationship with each other.  The Law has recently become a point of emphasis for the Department of Justice.  In July of this year, the DOJ intervened in a Stark Law case alleging $500 million in fraud.


If you have a Stark Law case, please contact the Rabon Law Firm.


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