When the U.S. District Court for the District of South Carolina first ordered Tuomey Healthcare System, Inc. (“Tuomey”) to pay $237 million for violations of the Stark Law and False Claims Act, the large penalty and the ramifications caught the attention of many. As stated by the United States Court of Appeals for the Fourth Circuit, the case was “troubling” because it revealed how “the Stark Law has become a booby trap rigged with strict liability and potentially ruinous exposure—especially when coupled with the False Claims Act.” United States ex rel. Drakeford v. Tuomey, 792 F.3d 364, 395 (4th Cir. 2015).
Now, approximately ten years after Plaintiff first filed a qui tam complaint, Tuomey will pay a reduced settlement of $72.4 million to the United States government. The legal settlement also provides for Tuomey’s sale to Palmetto Health, a multi-hospital healthcare system based in Columbia, South Carolina. According to Tuomey officials, the partnership with Palmetto Health will enhance and expand its local service capabilities to better meet the healthcare needs of those it serves.
While Tuomey will never pay the original $237 million penalty, its story will continue to mark the enormous cost of noncompliance with the Stark Law and False Claims Act.