The Department of Justice (DOJ) said October 16 that it has reached a $72.4 million settlement with Tuomey Healthcare System, averting a $237 million False Claims Act (FCA) judgment for illegally billing the Medicare program for services referred by physicians with whom the hospital had improper financial relationships.
Under the terms of the agreement, Tuomey, based in Sumter, SC, will be sold to Palmetto Health, a multi-hospital system based in Columbia,SC.
In July, the Fourth Circuit upheld a $237.5 judgment against Tuomey for violating the Stark Law and FCA in connection with certain physician compensation arrangements.
The relator and the government alleged that Tuomey entered into contracts with 19 specialist physicians that required the physicians to refer their outpatient procedures to Tuomey and, in exchange, paid them compensation that far exceeded fair market value and included part of the money Tuomey received from Medicare for the referred procedures. The government argued that Tuomey ignored warnings from one of its attorneys that the physician contracts were “risky” and raised “red flags.”
“The type of abusive compensation arrangements at issue in this case is precisely what the physician self-referral law was designed to prevent,” said Department of Health and Human Services (HHS) Inspector General Daniel Levinson. “Patients need and deserve to know that the hospital services they receive are the product of sound medical judgment, rather than motivated by the physician’s financial interests. The extensive litigation and settlement in this case should send a signal to the hospital industry that these tainted financial relationships simply will not be tolerated.”
As part of the settlement, Tuomey will enter into a five-year Corporate Integrity Agreement with the HHS Office of Inspector General, which will require it to retain an independent review organization to monitor any arrangements it makes with physicians or other sources of referrals for the duration of the agreement.
Tuomey CEO and President Michelle Logan-Owens said in a statement that the system’s partnership with Palmetto “is incredible news for our community “
The combination “will enhance the healthcare options for the citizens of our extended community and will be beneficial to the employees of Tuomey as well,” Logan-Owens said. “We are now able to close this chapter and look to the future,” she added.
