Tuomey Hospital May File for Bankruptcy this Month Due to Medicare Fraud Payments
Controversial Sumter hospital Tuomey Healthcare Systems may file for bankruptcy this month because the facility cannot pay its Medicare fraud penalty.
The hospital faces a $240 million Medicare fraud judgment. On Thursday, April 10th, a federal judge ordered the hospital system to set aside at least $70 million to continue payment on its False Claims Act violation penalties. Tuomey has set aside $50 million so far.
On Tuesday, October 1st, 2013, a federal judge ruled that Tuomey Healthcare Systems would pay for False Claims Act violations and Medicare fraud. The total penalties in her ruling were $276 million. However, on Wednesday, October 2nd, the judge ruled to lower that penalty by $39 million. Still, Tuomey claimed that the financial penalty was extreme and would cause the hospital – which is located in a rural area and serves an under-served population – to close and file for bankruptcy.
According to federal prosecutors, Tuomey Healthcare collected $39 million in false claims and Medicare fraud between 2005 and 2009, based on inaccurate billing for doctors’ procedures. A previous whistleblower trial in 2005 also found Tuomey guilty of Stark Law and False Claims Act violations – a four week trial with a 10 person jury ruled that the healthcare group was in effect paying kickbacks to doctors who were contracted part-time, but paid full-time wages.
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.
On Monday, April 28th, board trustees for the hospital told Tuomey Healthcare CEO Michael Schwartz that he could pursue the bankruptcy filing.
The Strom Law Firm Protects Medicare Fraud Whistleblowers in South Carolina
It is a provision of the Federal Civil False Claims Act that allows a private citizen to file a suit, in the name of the U.S. Government, charging fraud by government contractors and other entities that receive or use government funds. Bolstered by amendments passed by Congress in 1986, the law has armed private citizens who have independent and direct knowledge of fraud, whether financial institution fraud or Medicare fraud, with a weapon to prosecute government contractors and others who are defrauding the Government.
Common whistle blower actions include:
- Medicare fraud,
- defense contractor fraud, and
- other kinds of fraud against state or federal government
Qui tam lawsuits have been, and continue to be, a very effective and successful tool in combating government procurement and program fraud. If you have first-hand knowledge of government fraud occurring at your place of employment or your doctor’s office, including Medicare fraud, the attorneys at the Strom Law Firm can help protect your rights. In order to help the government provide the best possible services, Medicaid and Medicare fraud must be reported as soon as possible. The attorneys at the Strom Law Firm understand the complexity of qui tam and whistleblower suits, and we offer free, confidential consultations to discuss the facts of your case. Contact us today. 803.252.4800