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Tuomey Healthcare System has agreed to settle with the government for $72.4 million — less than a third of the $237 million that a federal appeals court said it would have to pay for illegal compensation arrangements with doctors.
The sum required by the verdict would otherwise have been the largest levied against a community hospital and would have exceeded the Sumter, South Carolina, system’s annual revenue.
As part of the settlement, Tuomey will also be sold to Palmetto Health, a system based in Columbia, South Carolina. Tuomey previously signaled it planned to partner with Palmetto.
Attempts to reach Tuomey for comment were not immediately successful Friday afternoon.
Before agreeing to settle the case, Tuomey had already lost three times in federal court.
In 2013, a federal jury concluded that Tuomey violated the False Claims Act by submitting tens of thousands of illegal claims to Medicare. The jury found that Tuomey paid doctors in ways that rewarded them financially for referring patients to the hospital in violation of the Stark law, tainting the Medicare claims. A federal appeals court upheld that decision in July.
The not-for-profit Tuomey system is anchored by Tuomey Regional Medical Center, which has 252 staffed beds, according to the American Hospital Association. It’s the only hospital in Sumter, a city of about 40,000.
The case was originally filed in 2005 by a whistleblower, Dr. Michael Drakeford, who declined to enter into an agreement offered by the hospital. In successful False Claims Act cases, whistleblowers are entitled to a percentage of whatever money the government is able to recover. Dr. Drakeford will receive $18.1 million from the settlement.
Lisa Schencker writes for Modern Healthcare, a sister publication of Business Insurance.
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