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Whistleblower News Update - Jury Finds Tuomey Healthcare Guilty of $39 Million in Stark Law Violations and CBS News Investigates Medicare Fraud by Major National Nursing Home Chain

The most notable recent development with respect to whistleblower, qui tam, and False Claims Act actions throughout the country was a jury verdict handed down against Tuomey Healthcare System last week.

After less than five hours of deliberations, the jury reached its decision that Tuomey, a community hospital in South Carolina, had violated the Stark Law, anti-kickback statutes, and the False Claims Act by improperly compensating 19 specialty doctors in order to keep their patients coming to the hospital.

Not only is the verdict itself noteworthy, but the fact that the verdict was reached by a jury is also of particular importance. Given that the jury heard, considered, and deliberated on complex health care legal issues involving the Stark Law, anti-kickback statutes, Medicare claims, and the False Claims Act, the Justice Department and whistleblower attorneys may be more willing to take cases before a jury. The jury’s verdict also makes non-compete agreements with referring physicians particularly risky.

Dr. Michael Drakeford, the whistleblower in this case, should be particularly proud of his role in the lawsuit. After he declined to enter into one of the agreements that the hospital was offering, he, instead, chose to file a lawsuit against the hospital in 2005 and expose the hospital for its illegal activities.

Although the hospital’s financial penalty is not yet determined, federal law would require repayment of all of the money paid for illegal Medicare claims, and the False Claims Act allows the government to seek reclamation of up to triple the amount of total damages, plus as much as $11,000 per claim. Accordingly, Tuomey faces up to $357 million in potential False Claims Act liability for its illegal compensation plans, though it may receive a penalty less than that amount.

In other whistleblower news, CBS News issued a special report last week detailing allegations of Medicare fraud by Life Care Centers of America – the third largest nursing home chain in the country, which boasts more than 30,000 beds in 28 states. As the CBS report details, several former employees of Life Care have come forward to say that the company is engaged in the practice of giving patients unnecessary rehab services and then billing the government for those services.

Among other services, Life Care provides speech, physical, and occupational therapy to its patients – services that are often unreasonably or unnecessarily administered and billed to Medicare. Life Care isn’t the only nursing home company that has been linked to illegal Medicare billing practices, however. In fact, according to the latest report from the inspector general, industry-wide, a quarter of all Medicare payments to nursing homes are made in error, which costs taxpayers $1.5 billion a year. Unfortunately, Medicare billings often go unchecked by the government – making it all the more important for whistleblowers to come forward and take action.

If you suspect health care law violations, please contact us at (312) 863-7222 to schedule a free, confidential appointment with one of our nationally-recognized whistleblower attorneys.

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