South Carolina-Based Healthcare System Resolves False Claims Act Case with Feds After $237 Million Verdict

hospital roomThe whistleblower provisions of the federal False Claims Act, codified at U.S.C.A. § 3729-3733, are based on the premise that those on the inside often have the best information about illegal acts and fraud. The Act has been around for a long time, having been enacted during the Civil War to combat fraud by suppliers of goods purchased by the Union during the war.

The Act has been amended several times over its 150 years of existence. In its current form, it provides for the filing of qui tam actions – lawsuits by private individuals suing on behalf of the government. Individuals filing lawsuits are called “relators” and can be rewarded handsomely for their efforts, if the suit is successful, via a share of the recovery obtained on the government’s behalf.

Whistleblower Suit by Doctor Who Was Allegedly Offered an Illegal Contract

In 2005, an orthopedic surgeon filed a qui tam, or “whistleblower,” suit against Tuomey Healthcare System, claiming that he had been offered a contract that was in violation of the Stark Law, a federal statute that prohibits hospitals from billing Medicare for certain services in situations in which the hospital has a improper financial relationship with the referring physician.

The government intervened in the suit, charging that Tuomey had entered into illegal contracts with some 19 medical specialists and that, under the contracts, the physicians were required to refer their outpatient procedures to Tuomey. In exchange, the physicians were allegedly to be paid compensation considerably beyond the fair market value of such services. According to the government, Tuomey was motivated to propose the contracts based on its fear of losing lucrative outpatient referrals to a new freestanding surgery center.

After a month-long jury trial in 2013, a South Carolina jury found that Tuomey (which is based in Sumter) had filed more than 21,000 false claims with Medicare. Later that year, the trial court entered a judgment against Tuomey for $237 million.

Recent Developments in the Case

Tuomey appealed the judgment, but an appellate court affirmed the trial court’s order in July 2015. Now, the United States Department of Justice has announced that it has resolved the judgment against Tuomey via a deal in which the healthcare system will pay $72.4 million to the federal government and will sell its operations to Palmetto Health, based in Columbia.

In its press release, the Justice Department stated, “Secret sweetheart deals between hospitals and physicians, like the ones in this case, undermine patient confidence.” The department also indicated that illegal contracts such as the ones at issue increase the overall costs of medical care.

To Get More Information About Filing a Whistleblower Lawsuit

If you have information that you believe could lead to a successful suit under the False Claims Act, you should speak to an experienced whistleblower attorney. The Law Offices of Patrick E. Knie can help employees or others who believe that they have discovered fraud or other illegal acts against the government. Call us at 864-582-5118 to schedule an appointment to talk about your case. We represent clients throughout South Carolina, with offices located in Spartanburg and Greenville.

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