Category Archives: Stark Law

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Tuomey Healthcare Faces $238 Million Judgment In False Claims Act and Stark Law Whistleblower Case

After two jury trials and one appeal, a federal district court judge lowered the boom on Tuomey this week, ordering it to pay over $277 million for False Claims Act violations predicated on its breaching the federal Stark Law which prohibits certain referral practices by health care providers. The judge subsequently lowered the amount to $238 million after the Department of Justice filed a motion to correct an error in how the judge calculated the penalties portion of the judgment.

 

The judgment shows the risk companies take when they roll the dice and “bet the company” to go to trial in FCA cases; Tuomey reportedly may not have enough assets to satisfy the judgment, and there is talk of a post judgment settlement. See Modern Healthcare article.

 

Along the way Tuomey’s defense lawyers pulled out many arguments only to see each one shot down by the jury and/or the judge. The court’s opinion makes for very instructive and interesting reading as the judge: upholds the jury’s finding that the company violated the Stark law by paying physicians (gastroenterologists) in excess of the fair market value of their services in return for their referrals of patients to Tuomey for their endoscopies (Opinion at pp. 8-11); refuses to overturn the jury’s decision rejecting the company’s “advice of counsel” defense (Opinion at pp. 11-14); and rejects the company’s arguments that damages were not adequately proven by DOJ and its expert witness, and that the mandatory treble damages and penalties under the FCA violate the Excessive Fines Clause (Eighth Amendment) and Due Process (Fifth Amendment) clauses of the United States Constitution (Opinion at pp. 14-36).

 

For the whistleblower, a doctor who objected to the conduct and filed his qui tam complaint in 2005, it has been a long and winding road that is not over yet. He and his lawyers are to be commended as are the lawyers and others at DOJ and the United States Attorney’s Office who have committed tremendous resources to see this case through. Finally we should not forget the two juries and the two district court judges and the hours they have devoted to rendering justice.