Before declaring himself ready for an agreement, Tuomey went to court and a jury ruled that Tuomey violated the Stark Act and the False Claims Act by paying doctors in a way that rewarded them financially for bringing patients to the hospital. The jury decided that Tuomey filed more than 21,000 false Medicare claims, which led to a $237 million verdict in court, leading to the comparison in October. The transaction agreement includes a four-year exclusion from participation in federal health programs and a $1 million fine that Cox will personally pay to resolve his involvement in the case. Cox also agreed to exempt Tuomey from any claim for compensation or reimbursement of the amount of compensation. The board decided that the system`s contracts with the physicians took into account the value of the expected transfers, and Tuomey knew that these contractual arrangements would result in false claims to the government. It found that Tuomey had filed a total of 21,730 Medicare claims, which were illegal under the compensation agreements. In the DOJ press release regarding the announcement of the Tuomey regime, Assistant Attorney General Benjamin Mizer said, “The secret operations of the treasury between hospitals and doctors, as in this case, undermine patient confidence and drive up health costs for all, including Medicare and its beneficiaries.” Sweetheart`s agreements between hospitals and referring physicians distort medical decision-making and drive up the cost of health care for patients and insurers,” said Assistant Attorney General Benjamin C. Mizer, head of the Justice Department`s civilian department. “Patients have the right to believe that a physician who orders a procedure or test does so because it is in the best interests of the patient and not because the physician can benefit financially from the referral.
Today`s comparison shows that the Department of Justice and its law enforcement partners will hold individual decision-makers to account for their involvement in the initiative of the companies and entities they derive from illegal activities. Over the years, we have written several publications on the Tuomey case. The Tuomey saga began in 2005, when Dr. Michael Drakeford, a South Carolina physician who had been approached by Tuomey for part-time work but rejected it, filed a whistleblower complaint. Tuomey entered into part-time contracts with 19 specialists to avoid reducing the volume of surgical cases after learning that doctors intended to move their practices to other community facilities. Dr. Drakeford argued that the employment agreements were contrary to the Stark Act and the DOJ agreed when it intervened in 2007 to resume the litigation. From there, the case took many twists and turns: DOJ collaborated with HHS and its Bureau of Inspector General, as well as with the U.S. Attorney`s Office in North Carolina, to obtain the comparison with Cox. The case has already influenced the careers of two Tuomey executives who resigned last week.
President and CEO Jay Cox and Executive Vice President and COO Gregg Martin have reached a separation agreement with the Board of Directors. Mr. Cox, who has been President and CEO since 1990, played his part when the hospital negotiated contracts with the 19 specialists. In the fall of 2016, the Department of Justice (DOJ) reached a settlement agreement with Ralph J. Cox, III, former CEO of Tuomey Health System, Inc. (Tuomey). The agreement dispelled allegations that Cox was personally involved in the remarkable case of Tuomey Stark Law.