US takes less than one-third of original settlement with Tuomey

When Tuomey Healthcare System was hit with a $237.5 million judgment in 2013, the South Carolina provider said it would be forced to close its doors. Two years later, the feds are settling for less than one-third of that original judgment following a long, tumultuous legal battle.

Tuomey Healthcare will pay $72.4 million for improper payments to physicians that were categorized as kickbacks, according to the Department of Justice (DOJ). The health system will also be sold to Palmetto Health in Columbia, South Carolina.

The legal battle has grabbed the attention of attorneys over the last several years, particularly after the nine-figure settlement was upheld by a federal appeals court in June. The system was convicted of engaging in "improper financial relationships" with physicians, which were ultimately characterized as kickbacks. Prosecutors argued that the system paid 19 specialists' salaries that far exceeded fair market value in an effort to prevent losing "lucrative outpatient procedure referrals to a new freestanding surgery center." Additionally, the system was accused of ignoring warnings from its attorneys that the agreements violated anti-kickback laws.

Physician compensation agreements have been targeted by federal investigators as of late. In June, the Office of Inspector General (OIG) released a fraud alert, which highlighted the agency's renewed interest in physician compensation agreements, particularly medical directorships that exceed fair market value. Enforcement has followed close behind, as major health systems such as Adventist Health System and North Broward Hospital District agreed to pay $118.7 million and $69.5 million respectively to settle claims surrounding physician compensation agreements.  

For more:
- read the DOJ announcement