Medicare Compliance & Reimbursement

Heads up, health care executives: Stark just got personal.

Ralph J. Cox III, former chief executive office of Tuomey Healthcare System in Sumter, SC, has agreed to pay $1 million to settle allegations involving his role in false claims the hospital submitted to Medicare and Medicaid, the Department of Justice announced (https://www.justice.gov/opa/pr/former-chief-executive-south-carolina-hospital-pays-1-million-and-agrees-exclusion-settle) Sept. 27.

The settlement excludes Cox from federal health programs for four years, which means he can’t administer any program that takes Medicare, Medicaid, or other federal funds. (Cox resigned from Tuomey Healthcare System in 2013.)

“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,” said Principal Deputy Assistant AG Benjamin C. Mizer.

“Sweetheart deals between hospitals and referring physicians distort medical decision making and drive up the cost of healthcare for patients and insurers alike,” Mizer said.

Tuomey? Again?

Does the name sound familiar? That’s because the case has dragged on for more than ten years. Attorneys and health care compliance watchers follow the case (and its aftermath) because it’s one of the few times the controversial and cumbersome Stark Law has been tested in court.

Attorneys prosecuting the case linked the Stark Law to the False Claims Act. The Tuomey Healthcare System compensated doctors in ways that violated the Stark law, attorneys argued, thus tainting 21,730 Medicare claims worth $39.3 million and triggering FCA.

The District Court entered a $237.5 million judgment against Tuomey. After appeals, the health system settled for $72.4 million and agreed to sell itself to Palmetto Health, also in South Carolina.

DOJ’s ‘Yates Memo’ Demands Individual Accountability

The Cox settlement is one more strong signal that DOJ is serious about holding individuals accountable for corporate misconduct and fraud, points out The National Law Review (www.natlawreview.com/article/corporate-executives-beware-tuomey-ceo-settles-false-claims-act-violations-1m-and-us).

In September 2015, DOJ published the Yates Memo (https://www.justice.gov/dag/file/769036/download) (named for its author—Deputy AG Sally Quillian Yates). “One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetuated the wrongdoing,” Yates wrote. “Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.”

Companies under investigation are making “real and tangible efforts” to comply with the memo’s requirements, Yates said at a legal conference earlier this year. Companies are even forking over what are now called “Yates Binders,” which contain documents like relevant emails from individuals the feds are investigating, she said.

The Yates Memo puts health care employees and execs “on notice” observe Baker Donelson attorneys Jonell Beeler and Ted Lotchin in an analysis published late last year (www.bakerdonelson.com/files/Uploads/Documents/Yates Memo Law360.pdf). The attorneys cite recent, well-publicized Medicare takedowns in which scores of individuals faced false claims charges.