How To Avoid This $72 Million Compliance Mistake

Tuomey, a community-based hospital in South Carolina, and the US government, recently resolved a False Claims Act judgement that resulted in a whopping $72 million dollar settlement.

It all started in 2005 when a physician at Tuomey decided to blow the whistle. In 2013, a federal jury ruled that Tuomey had indeed violated the False Claims Act by submitting illegal claims to Medicare. In addition, the jury found that the hospital was in violation of the Stark Law for giving economic incentives to doctors for referring patients. 

The trial and retrial resulted in an order for Tuomey to pay $237 million, the resignation of top executives, and eventually the recent settlement of $72 million along with a corporate integrity agreement and a sale of the hospital to Palmetto Health, finalized just days ago.

The case shows the challenges that providers could face in violation of the False Claims Act and Stark Law:

False Claims Act: Also referred to as the “Lincoln Law,” is a federal law of the United States of America, which imposes liability on persons or providers who “knowingly,” commit fraud against government programs. It is the government’s strongest tool for fighting fraud, mainly because it includes a whistleblower provision that allows non-government citizens to file actions on the government’s behalf. The person/persons who files under the Act will receive a percentage of any damages the government receives. In the case of Tuomey, the whistleblowing doctor received 18 million dollars. 

Stark Law: In summary, Stark Law prohibits physicians from referring patients to another institution where the physician might have a financial relationship including investment interests, compensation arrangements, or ownership.

This costly case lends an excellent opportunity for providers to learn from Tuomey’s mistakes. Organizations should review Tuomey’s corporate integrity agreement to see how these agreements might help improve their own practices and significantly reduce their organization’s risk. It’s an important lesson on why compliance programs can be your greatest defense.

Watch our free on-demand webinar, "The Story Behind The $72 Million Dollar Settlement", for more information on this monumental case, how to implement CIA requirements, and what preventative measures can reduce your organization’s risk: