Possible Settlement of False Claims Charges for Tuomey Hospital as Two Execs Resign
On September 26th, Tuomey Healthcare System’s CEO Jay Cox, and Vice President/COO Gregg Martin, resigned. The move is seen as possibly part of a deal to settle the False Claims and Stark Law charges against the health care organization.
The two executives announced their departures from the organization on Thursday morning at a staff meeting. Their departure comes about two months after a federal grand jury found Tuomey guilty of violating the Stark Law and the False Claims Acts, collecting more than $39.3 million in fraudulent Medicare claims between 2005 and 2009.
“We have talked with Jay and Gregg recently about it at length,” said Tuomey Board of Directors Chairman John Brabham. “It was a difficult decision for both parties. And it was a mutually agreed upon decision.”
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. 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. The action was, according to prosecutors, a violation of the False Claims Act and the Stark Law.
The latest guilty verdict was actually a re-trial stemming from the 2005 False Claims violation allegations. The first federal prosecution of those claims led to a split decision: $45 million in penalties and an appeal to the 4th Circuit. The second trial this spring puts penalties against Tuomey at more than $230 million.
“It is Tuomey’s own management and board who are responsible for permitting the damages and penalties to amount to the level ultimately found by the jury,” the federal government wrote in June. “Tuomey’s executives and management decided to throw caution to the wind and refused to terminate the contracts until the first jury declared them illegal.”
“It has been my greatest joy to live in Sumter and work with the fine people of Tuomey Healthcare System,” said Cox in the statement. “I wish the board, the physicians, the employees and the hospital the absolute best as Tuomey moves forward in our mission to provide excellent healthcare to all the people in our community. I truly appreciate the opportunity to have served Tuomey and Sumter for the past 28 years.”
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.