The next time whistle-blower attorney Joel Androphy sits down for a settlement conference with hospital lawyers, he'll have a potent new tool in his arsenal: last week's $39 million Stark law jury verdict against Tuomey Healthcare System in Sumter, S.C.
“I'd use this case in a heartbeat,” Androphy said. “I'd send this lawsuit to the defendant's lawyers and say, you need to pay us, otherwise you could be responsible for this amount of damages. They then send that to the board of directors. … It could go a long way toward encouraging people to settle.”
Tuomey, a stand-alone community hospital with annual revenue of about $200 million, faces an eye-popping maximum penalty under the False Claims Act of up to $357 million because of damage-multipliers and per-claim fines under the federal anti-fraud law.
After a four-week trial in U.S. District Court in Columbia, S.C., a jury took half a day to rule that tens of thousands of Tuomey's Medicare claims for physician services violated the Stark law, which restricts financial arrangements with referring physicians, because 19 physicians were receiving above-market compensation. Based on the Stark violation, the jury also found that the Medicare bills violated the False Claims Act, triggering punitive math that could triple actual damages and impose as much as $11,000 in fines for each of the 21,730 false claims.