The former CEO of Tuomey Healthcare will personally pay $1 million to resolve his involvement in entering physician compensation arrangements that led to one of the largest-ever Stark law cases.
Ralph "Jay" Cox III will also be excluded for four years from participating in any federal programs, the U.S. Department of Justice said on Tuesday.
In October, Sumter, S.C.-based Tuomey agreed to pay $72.4 million to settle allegations of illegal compensation arrangements with doctors. As part of the settlement, Tuomey was sold to Palmetto Health.
Before agreeing to settle, Tuomey went to trial and a jury found that Tuomey violated Stark law and the False Claims Act by paying doctors in ways that rewarded them financially for referring patients to the hospital. The jury determined Tuomey filed more than 21,000 false Medicare claims, leading to a $237 million judgment in court that led to the October settlement.
The government alleged during the trial that Cox “ignored and suppressed warnings from a hospital attorney that the physician contracts were risky and raised red flags," and even pushed Tuomey to enter questionable deals with 19 specialist physicians over fears that it would lose out on patients to a new surgery center.
“Sweetheart deals between hospitals and referring physicians distort medical decision making and drive up the cost of healthcare for patients and insurers alike,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department's Civil Division. “Today's settlement demonstrates that the Justice Department and its law enforcement partners will hold individual decision makers accountable for their involvement in causing the companies and facilities they run to engage in unlawful activities.”
DOJ worked with HHS and its Office of Inspector General as well as the U.S. Attorney's Office in North Carolina to reach the settlement with Cox.