Former Tuomey CEO will pay $1M to settle false claims case

The former CEO of Sumter, S.C.-based Tuomey Healthcare System Ralph J. Cox III has agreed to pay $1 million for his involvement in an illegal Medicare and Medicaid billing scheme, according to the Department of Justice.

Under the terms of the agreement, Mr. Cox will also be excluded from participating in federal healthcare programs for four years.

The case against Tuomey arose from a lawsuit filed in October 2005 by Michael K. Drakeford, MD, under the qui tam, or whistle-blower, provision of the False Claims Act. The government later joined Dr. Drakeford's case.

The government accused Tuomey of entering into 19 contracts with 19 specialists that required the physicians to refer their outpatient procedures to Tuomey, and, in exchange, paid them compensation that far exceeded fair market value.

In May 2013, a jury found Tuomey violated Stark Law and the False Claims Act by submitting $39 million in false claims to government payers and compensating physicians for referrals.

At the district court level, a $237.5 million judgment was entered against Tuomey. The system appealed the ruling, and a three-judge panel unanimously upheld the district court's ruling in July 2015. To avoid the judgment against it, Tuomey entered into a settlement agreement with the federal government last October. Tuomey paid $72.4 million to settle the case and agreed to be sold to Columbia, S.C.-based Palmetto Health.

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