South Carolina Hospital Found Guilty of Violating False Claims Act

Hospital Collects Millions in Medicare Claims, Jury Says They Violated the False Claims Act

A federal grand jury in Columbia, SC ruled on Wednesday, May 8th, that the Tuomey Healthcare System violated the Stark Law and the False Claims Act, collecting more than $39.3 million in fraudulent Medicare claims.

The Sumter-based hospital has been on trial for the past month for allegations saying they hired 19 local doctors to lucrative part-time contracts in 2005 in order to ensure they would continue to receive referral fees associated with the physicians’ procedures and specialties.

Under Medicare law, it is illegal to pay physicians with part of the referral fees received, and constitutes kickbacks, which violates the False Claims Act. Tuomey allegedly filed several of these illegal referrals between 2005 and 2009 for procedures performed by the physicians. The doctors’ contracts suggested nothing about the referral fees paying a portion of their salary, but prosecutors for the government argued that Tuomey paid far more than fair market value to sign the physicians on, and therefore kickbacks had to be involved in their pay.

Tuomey, however, argued that the contracts were completely legal, and that the above average pay was simply to ensure the hospital had certain kinds of physicians on hand to offer a variety of medical services to an otherwise underserved community.

Defense for Tuomey also argued that, even if the contracts were illegal and relied on kickbacks and violated the False Claims Act, the hospital system relied on the advice of its legal experts.

Federal District Attorney Normal Acker, however, said that even if Tuomey had previously relied on its attorneys for contract advice, in 2005 the hospital system hired lawyer Kevin McAnaney, who raised several objections about the legality of the physicians’ contracts. He was allegedly fired because the hospital did not like his objections.

Tuomey Hospital has 28 days to file an appeal.

Filing a Whistleblower Lawsuit Under the False Claims Act

Under the qui tam provision of the False Claims Act, the relator (plaintiff) files an action on behalf of the U.S. Government. The Act allows a wide variety of people and entities to file a qui tam action.

An employee who blows the whistle on his or her employer (commonly known as a “whistleblower”) is one of the most common types of relators. Many employees normally file qui tam actions against their employers after repeated attempts to resolve the issues internally have met with negative results. This can be as simple as an employee calling into a compliance hotline or something as serious as reporting the incident to a supervisor. However, employees who file a qui tam action, or those that assist in furthering an action, are legally protected against job retaliation by the employer.

The Strom Law Firm Can Help Protect Whistleblowers with the False Claims Act

If you are personally aware of a fraud that has been committed by your current or former employer, a competitor or otherwise, contact the Qui Tam attorneys at the Strom Law Firm today for a no cost consultation to discuss the facts of your case and whether filing a qui tam may be appropriate. We understand the complexity of the False Claims Act, and can help you with your case. We offer free, confidential consultations so contact us for help today. 803.252.4800.

About Pete Strom

Defending criminal charges including drug crimes, DUI, CDV, mail fraud, wire fraud, bank fraud, computer crimes, money laundering, and juvenile crimes, Pete also handles Federal and State investigations. Representing individuals in Civil Matters including Class Actions, Personal Injury, Qui Tam Actions, Defective Products, Nursing Home Neglect, and Professional Licensing Defense cases. Joseph Preston “Pete” Strom, Jr., the managing partner at Strom Law Firm, L.L.C., has been fighting for justice since 1984.

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