. . . . . . . . . . . . . . . . . . . . . . . . . . . . Medical
. . . Journal
. . . -.Houston
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August 2015
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LEGAL
AFFAIRS
Fourth Circuit upholds $237 million
judgment against rural hospital
in physician offices and independent
surgical centers. As a result, Tuomey stood
the employment contracts, the physicians
were required to perform outpatient
BY MARY M.
BEARDEN AND
ALLISON SHELTON,
Brown & Fortunato,
P.C.
Tuomey retained legal counsel to review the
contracts. In 2003, local counsel reviewed
the arrangement and engaged a consulting
firm to conduct a fair market value analysis.
Tuomey also retained Richard Kusserow
to review the arrangement. At the time,
Kusserow was a former Inspector General
for the U.S. Department of Health and
Human Services (HHS).
On July 2, 2015, the Fourth
Circuit Court of Appeals
upheld a $237 million
judgment against Tuomey
Healthcare Systems, Inc. for
violations of the Stark Law
and the False Claims Act
(FCA). U.S. ex rel. Drakeford v. Tuomey
Healthcare Systems, Inc. has been a closely
watched case in the health care industry
because it addresses several key issues under
the Stark Law and the FCA.
Tuomey is a nonprofit hospital located in
a rural area that has been designated as
medically underserved. In 2000, physicians
who had previously performed surgeries at
the hospital began performing the surgeries
previous year. The physicians also received
a productivity bonus of 80 percent of the
physician’s collections and an incentive
bonus of seven percent of the physician’s
earned productivity bonus. Furthermore,
Tuomey provided to the physicians certain
benefits, including malpractice insurance,
health insurance, and billing services.
to suffer a significant financial loss.
To address the situation, Tuomey proposed
to employ the physicians part-time. Under
surgeries at the hospital. As compensation,
the physicians would receive a base salary.
This salary was adjusted yearly based
on the physician’s collections from the
Tuomey eventually engaged nineteen
physicians under the part-time employment
arrangement.
However, Tuomey was
unable to reach an agreement with Dr.
Michael Drakeford. Drakeford believed
that the arrangement violated the Stark
Law because the physicians were being
paid in excess of their collections. In 2005,
Tuomey and Drakeford jointly engaged
Kevin McAnaney for legal advice on the
arrangement.
Please see LEGAL AFFAIRS page 16