Tuomey – Case closed!
The saga of the Tuomey case has finally come to an end. After 10 long years of investigation, litigation and appeals, on October 16, 2015, the Department of Justice (DOJ) announced that it had reached a settlement with Tuomey Healthcare System for $72.4 million.
We have written several publications about the Tuomey case over the years. The Tuomey saga began in 2005 when a whistleblower lawsuit was filed by Dr. Michael Drakeford, a South Carolina physician who had been approached by Tuomey about a part-time employment arrangement but turned it down. Tuomey did enter into part-time employment agreements with 19 specialists in order to avoid a reduction in its surgical case volume after learning that the physicians intended to move their surgeries to other facilities in the community. Dr. Drakeford alleged that the employment arrangements violated the Stark Law, and the DOJ agreed, intervening in the lawsuit in 2007 to take over the litigation. From there, this case took many twists and turns:
- March 2010 - The District Court trial ended in a jury verdict that the employment arrangements violated the Stark Law but not the False Claims Act.
- June 2010 - The 4th Circuit Court of Appeals overturned the judgment from the District Court on procedural grounds, ruled in favor of the Government on its unjust enrichment claim and ordered Tuomey to pay $44.8 million. The Court of Appeals also granted the Government’s motion for a new trial.
- May 2013 - After the second trial, the jury found that Tuomey violated the False Claims Act by submitting 21,730 tainted claims, with a value of $39,313,065, to the Medicare program.
- July 2013 – Tuomey requested judgment as a matter of law and also requested a new trial.
- October 2013 – The Court rejected Tuomey’s requests and determined damages in the amount of $237,454,195 (($5500 x 21,730 claims) + ($39,313,065 x 3)).
- July 2015 – The 4th Circuit Court of Appeals upheld the lower court’s decision in a 67 page decision.
In the DOJ press release announcing the Tuomey settlement, Principal Deputy Assistant Attorney General Benjamin Mizer commented: “Secret sweetheart deals between hospitals and physicians, like the ones in this case, undermine patient confidence and drive up healthcare costs for everybody, including the Medicare program and its beneficiaries.”
In the settlement agreement, Tuomey admits that its financial arrangements with the 19 physicians violated the Stark Law and that it “violated the False Claims Act by knowingly submitting to Medicare 21,730 false claims for designated health services that had been referred to Tuomey in violation of the Stark Law … by those 19 physicians.” The settlement is conditioned on completion of the sale of Tuomey to Palmetto Health, a multi-hospital system based in Columbia, South Carolina, by December 31, 2015. The whistleblower, Dr. Drakeford, will receive 25% of the settlement amount ($18.1 million) plus $2.5 million for his attorney’s fees and expenses.
This is for informational purposes only. It is not intended to be legal advice and does not create or imply an attorney-client relationship.Download PDF