Tuomey Healthcare System Ordered to Pay Over $237 Million after Jury Found Tuomey Liable Under False Claims Act and Stark Law

November 1, 2013

On October 2, 2013, the United States District Court for the District of South Carolina ordered Tuomey Healthcare System, Inc. to pay more than $237 million for violating the Stark Law and the False Claims Act (FCA).  Judge Margaret B. Seymour affirmed a jury verdict that found that Tuomey violated the Stark Law and the FCA, and that 21,730 claims were falsely submitted to the government, amounting to over $39 million in actual damages.

According to the court’s amended order, the U.S. government requested the district court to award $237,454,195.  The government reached this amount by adding together:

  • $5,500 (the minimum civil penalty per false claim allowed by law) multiplied by 21,730 (the number of false claims that the jury determined Tuomey made) and
  • $39,313,065 (the amount of actual damages Tuomey owed to the government, according to the jury) multiplied by 3 (provided by law).

Money ExchangeTuomey first argued that this was an excessive fine prohibited by the Eighth Amendment of the Constitution.  The court disagreed, finding that the civil penalties that Congress authorized under the FCA are not remarkably disproportional to the magnitude of Tuomey’s violation.  Tuomey then argued that it should only be liable for civil penalties of $22,000 to account for four Medicare cost reports that it claimed were the only false claims the government was able to provide enough evidence for.  Again, Judge Seymour rejected Tuomey’s argument and found that the jury was correct in its finding that 21,730 false claims were submitted.

Patient Referrals Violated Stark Law and FCA

According to Judge Seymour’s order, Dr. Michael K. Drakeford, on behalf of the federal government, filed a qui tam lawsuit against Tuomey on October 4, 2005, alleging violations of the Stark Law and the FCA.  Dr. Drakeford alleged that Tuomey had employment contracts with 19 specialist physicians after determining that it would lose millions in revenue if endoscopies were referred elsewhere.  The employment contracts compensated the physicians above fair market value in return for providing outpatient procedures at Tuomey’s facilities.  Tuomey then submitted claims to Medicare and Medicaid requesting reimbursement for fees that were generated by the outpatient procedures.

Do You Have Information Regarding Medicare or Medicaid Fraud?  Get a Free Consultation

If you have information that false claims were submitted to the government, contact one of the whistleblower lawyers at Gibbs Law Group LLP today for a free and confidential consultation.  Simply fill out the form to your right or call us toll-free at (866) 9981-4800.