S&P: Tuomey Healthcare's False Claims Suit Could Decimate Finances

Standard & Poor's Ratings Services has downgraded the credit rating of Sumter, S.C.-based Tuomey Healthcare System two notches, from "BBB-" to "BB," due to the health system's current lawsuit with the federal government, and analysts said the suit has the possibility to decimate Tuomey's financial profile.

Earlier this month, a jury found Tuomey violated the Stark Law and False Claims Act by submitting almost $40 million of Medicare claims that were illegal due to the system's kickbacks to 19 physicians. According to an Item report, the federal government is seeking more than $237.4 million in damages, which would potentially be one of the largest False Claims settlements against any provider. Tuomey still has two weeks to respond to the government's motion or file an appeal.

S&P analysts said early reports indicated damages could range from $40 million to more than $300 million, and a $40 million settlement is "affordable" at Tuomey's new "BB" credit rating. However, if Tuomey was forced to pay the reported $237.4 million, S&P would need to "reassess Tuomey's financial profile and could cause us to lower the rating further."

In a public notice to bondholders, Tuomey executives said if its settlement reaches nine figures, and if statutory penalties are assessed, "Tuomey reasonably expects it could be rendered insolvent," according to S&P's report.

More Articles on Hospital Lawsuits:

Jury Sides With Whistleblower in Suit Against Corona Regional in California
Parkland Memorial Hospital to Pay $1.4M Settlement to Resolve Fraud Allegations
Jury Finds Tuomey Healthcare Submitted $39M in Illegal Medicare Kickbacks

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