Tuomey Hospital Violated The Stark Law, Not the Fair Claims Act

As reported by the Sumter Item, earlier this week jurors delivered a split verdict in a Qui Tam Case brought by the Federal Government against Tuomey Healthcare System, unanimously finding that the Tuomey violated Stark Law, but not the False Claims Act.

Dr. Michael Drakeford was the original plaintiff whistle blower , also known as a relator, who filed the qui tam action.  As is typical in whistle blower cases, the U.S. government intervened as the lead plaintiff.

From our review of the Complaint filed in the action, the lawsuit centered around a series of employment contracts entered into by and between Tuomey hospital and several local Sumter physicians.  The suit alleged that these contracts generated business for Tuomey’s Outpatient Surgery Center, which opened in February 2004, in violation of Federal law.

The government alleged that these contracts violated the Stark Law by paying the physicians who would refer their patients to Tuomey’s Outpatient Surgery Center, pursuant to contract that: exceeded the fair market value, was not commercially reasonable, and took into account the volume of business generated by the physician for Tuomey.

Given the self interested referral, the services performed as well as any bill submitted to Medicaid or Medicare for such services violated Federal law.

The government sought to recover $277.5 million for allegedly fraudulent Medicare claims filed in violation of the False Claims Act based upon the alleged violations of the physician self-referral statute, known as the Stark Law.

Assistant U.S. Attorney Norman Acker told The Sumter Item that the government will seek a substantial amount of damages based upon the jury’s determination that the hospital violated the Stark Law.

“The government is still seeking single damages in the form of $44.8 million,” he said, noting an official Department of Justice news release would be issued today.

Perry’s article further reported that the government must file a response to a motion from Tuomey’s lawyers that seeks to assert no money should be recovered for Tuomey’s Stark Law violations no later than April 15th; Judge Matthew Perry will hold a hearing that has yet to be scheduled to determine the outcome of any money recovered by the government.

We will keep you updated.