Issue link: https://beckershealthcare.uberflip.com/i/610563
42 FINANCE Tuomey Dodges $237M False Claims Verdict by Settling With DOJ: 10 Things to Know By Ayla Ellison T uomey Healthcare System has agreed to pay the federal government $72.4 million to settle False Claims Act alle- gations, allowing the Sumter, S.C.-based system to avoid a $237 million judgment entered against it and upheld by the U.S. Court of Appeals for the Fourth Circuit in July, according to the Department of Justice. Here are 10 things to know about the case brought against Tuomey and the system's settlement with the federal government. The allegations against Tuomey 1. The case arose from a lawsuit filed in October 2005 by Michael K. Drakeford, MD, under the qui tam, or whistle-blower, provision of the False Claims Act. The government joined Dr. Drakeford's case. 2. In its case against Tuomey, the government argued that the system entered into 19 contracts with 19 specialists that required the physicians to refer their outpatient procedures to Tuomey, and, in exchange, paid them compensation that far exceeded fair market value. 3. The government alleged that throughout the process of devel- oping the physician contracts, Tuomey ignored warnings from one of its attorneys that the physician contracts were "risky" and raised "red flags." How the case played out in court 4. In May 2013, a jury found Tuomey violated Stark Law and the False Claims Act by submitting $39 million in false claims to Medi- care and compensating physicians for referrals. 5. At the district court level, a $237.5 million judgment was entered against Tuomey, which was comprised of damages of $117.9 million and civil penalties of $119.5 million. 6. The system appealed the ruling. A three-judge panel unani- mously upheld the district court's ruling in July. Tuomey's settlement with the federal government 7. To avoid the $237.4 million judgment against it, Tuomey en- tered into a settlement agreement with the federal government. 8. Under the terms of the settlement agreement, Tuomey will pay $72.4 million to settle the case and be sold to Columbia, S.C.- based Palmetto Health. 9. Dr. Drakeford, the whistle-blower, will receive approximately $18.1 million under the settlement. 10. Regarding the settlement, Dan Levinson, who heads HHS' Of- fice of Inspector General, said, "The extensive litigation and settle- ment in this case should send a signal to the hospital industry that these tainted financial relationships simply will not be tolerated." n The 'Halo Over Nonprofits' is Gone and 3 Other Takeaways From Recent Stark Law Settlements By Ayla Ellison T wo Florida health systems, each of which faced Stark Law and False Claims Act allegations, entered into settlements with the Department of Justice in recent weeks. e facts of the cases differed, but both offer valuable lessons for hospital and health system executives. The Broward Health case Fort Lauderdale, Fla.-based Broward Health, formerly North Broward Hospital District, entered into a settlement with the DOJ on Sept. 15. e system agreed to pay the fed- eral government $69.5 million to settle allegations it violat- ed the False Claims Act by engaging in improper financial relationships with physicians. e Broward Health settlement resolved allegations that the system provided compensation to nine employed physicians that exceeded the fair market value of their ser- vices. e allegations arose from a lawsuit filed by Michael Reilly, MD, under the qui tam, or whistle-blower pro- visions of the False Claims Act. Since the settlement was announced, Dr. Reilly has clearly stated what he believes led to the issues at Broward Health — hospitals employing physicians. "We have to get hospitals out of the business of hiring doctors," Dr. Reilly told Kaiser Health News. "It's potential- ly detrimental to the patient, and it's terrible for healthcare." Dr. Reilly was offered an employment deal with Bro- ward Health, but he rejected the offer aer his lawyer told him it was illegal. In his lawsuit, which was originally filed in 2010 and unsealed last month, Dr. Reilly alleges the sys- tem carefully tracked the value of physician referrals and pressured physicians to increase referral volume when they lagged. The Adventist Health System case Just one week aer the Broward Health settlement was announced, Altamonte Springs, Fla.-based Adventist Health System agreed to pay $118.7 million to the federal government and to the states of Florida, North Carolina, Tennessee and Texas to settle allegations it violated the False Claims Act by maintaining improper compensation arrangements with referring physicians. FINANCE