Jury Returns $39 Million Verdict Against Hospital For Violating Stark Law & False Claims Act

WASHINGTON, DC - United States Attorney for the Eastern District of North Carolina Thomas G. Walker announced that in federal court on May 8, 2013, a jury returned a $39 million verdict against Tuomey Healthcare System (Tuomey Hospital), located in Sumter, South Carolina for violations of the Stark Law and False Claims Act.

United States Attorney Thomas G. Walker stated, “This case sends a clear message to hospitals that Stark Law and False Claims Act violations will be taken seriously.” 

“This verdict sends a message to those who violate the Stark Law by inappropriately profiting from referrals,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General, Atlanta Region. “The OIG will continue to work aggressively to eliminate this type of behavior which drives referrals to a particular provider, thereby increasing healthcare costs and eliminating fair competition.” “If you suspect Medicare or Medicaid fraud please report it by phone at 1-800-447-8477 (1-800-HHS-TIPS), or E-Mail at HHSTips@oig.hhs.gov.” 

Testimony and documents showed that the hospital entered into unlawful contracts that paid physicians in compensation amounts far exceeding market value for their services for the hospital.  The Stark Law prohibits hospitals from submitting claims to Medicare for payment based on patient referrals from physicians who have a prohibited financial relationship with the hospital.  Because the jury also found that the hospital violated the False Claims Act, the United States is entitled to seek treble damages plus certain other penalties, as provided for in the False Claims Act.  Both the government and Tuomey are expected to file post-trial motions in the coming weeks, asking for appropriate relief from the Court.

This case was investigated by the Department of Health and Human Service’s Office of Inspector General.  The case was prosecuted by Assistant United States Attorney Norman Acker with the Eastern District of North Carolina and by Tracy Hilmer, Assistant Director, Commercial Litigation Branch of the Justice Department’s Civil Division.