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After two jury trials and one appeal, a federal district court judge lowered the boom on Tuomey, ordering it to pay over $277 million for False Claims Act (FCA) violations predicated on its breaching the federal Stark Law which prohibits certain referral practices by health care providers. The DOJ subsequently agreed to accept $238 million after correcting an error in how the judge calculated the penalties portion of the judgment. The judgment shows the risk companies take when they roll the dice and “bet the company” to go to trial in False Claims Act cases.
Along the way Tuomey’s defense lawyers pulled out many arguments only to see each one shot down by the jury and/or judge. The District Court’s opinion is captioned United States ex rel. Drakeford v. Tuomey, 976 F. Supp. 2d 776, 785 (D.S.C. 2013). And it makes for very instructive and interesting reading.
First, the judge upheld the jury’s finding that the company violated the Stark law. The company paid physicians (gastroenterologists) in excess of the fair market value of their services in return for their referrals of patients to Tuomey for their endoscopies. This not only violates Stark, but causes False Claims Act violations as well.
In the court’s view, a reasonable jury could have found the physicians’ compensation varied with volume and value of the physicians’ referrals to Tuomey. Tuomey’s argument is without merit.
Finally, it rejected a slew of damages arguments. That damages were not adequately proven by DOJ and its expert witness. Tuomey also argued that treble damages and penalties under the False Claims Act violate the Constitution. In particular, the Excessive Fines Clause of the Eighth Amendment and the Due Process Clause of the Fifth Amendment. Id. at 789-94.
The whistleblower is a doctor who objected to the conduct and filed his qui tam complaint in 2005. It has been a long and winding road that is not over yet. He and his lawyers are to be commended as are the lawyers and others at the DOJ and the U.S. Attorney’s Office who have committed tremendous resources to see this case through. Finally we should not forget the many hours that the two juries and two district court judges devoted to rendering justice.