Tuomey names interim CEO in wake of ruling it owes feds $237M

Tuomey Healthcare System, the South Carolina hospital that saw its longtime CEO leave in the wake of a large jury verdict against the organization, has appointed a new interim top executive through a corporate turnaround firm.

Michael Schwartz' appointment as interim president and CEO at Tuomey is effective Dec. 2, according to an announcement from the 242-bed hospital in Sumter, S.C. He's working at Tuomey through a contract with FTI Consulting to provide executive management. Schwartz' resume includes a law degree, a master's in health administration, and decades of experience as a healthcare executive.

Schwartz joins Tuomey during a time of uncertainty for the hospital. Last May, Tuomey was found liable by a jury for violations of the Stark law and the False Claims Act because 21,730 Medicare claims were illegally influenced by compensation agreements that gave 19 doctors financial inducements to refer patients to the hospital.

A federal judge later ruled that the hospital owed the federal government $237 million in damages for the violations. The sum eclipsed the entire annual revenue of the hospital. Several aspects of the court decisions have been appealed to the 4th U.S. Circuit Court of Appeals in Richmond, Va., though the system has also placed $50 million in escrow.

Standard & Poor's Ratings Services has dropped the hospital's bonds to junk status because of the risk of nonpayment, but said the CCC rating could improve with a settlement.

Federal officials have said in court filings that they're willing to try to negotiate a lower settlement amount, but the terms of any potential settlement have not been released.

Jay Cox, CEO of Tuomey for 23 years, announced he would leave the hospital last September.

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