The U.S. Department of Justice recently announced the conclusion of a long-running Stark Law violation case. The case, originally filed in 2005, was against Tuomey Healthcare System, who was found to have violated Stark Law requirements when negotiating contracts with physicians at multiple facilities. Per the terms of the agreement, the company will pay a $72.4 million settlement and enter into a five-year Corporate Integrity Agreement.
The original amount of the settlement was $237 million, but was reduced when Tuomey established its inability to pay that amount. As part of the agreement, Tuomey will also sell the vast majority of its assets to Palmetto Health, a multi-hospital healthcare system located in South Carolina.
Physician Compensation Agreements Raised Red Flag
The case centered on part-time employment agreements for 19 physicians. These physicians were paid salaries well above market value compensation and, in turn, agreed to perform outpatient procedures exclusively at Tuomey healthcare facilities. This type of employment agreement is prohibited by Stark Law, a federal regulation that prevents physicians from referring patients to a facility or practitioner in which they have a financial interest. Employment contracts are thoroughly reviewed to ensure that physicians are not given incentives to “self-refer.”
The case went through two separate jury decisions, one in 2010 and one in 2013, before being appealed to the Fourth Circuit. Tuomey argued in its appeal that they acted under advice of counsel when drawing up the agreements for the 19 physicians. The Fourth Circuit rejected this argument, citing evidence that Tuomey had received multiple legal opinions, but had chosen to ignore those that were counter to its aims. In July of this year, the Fourth Circuit ruled to uphold the ruling from 2013.
Philadelphia Stark Law Lawyers at Sidney L. Gold & Associates Advise and Defend Physicians and Health Care Providers
Stark Law has very specific requirements in place that affect how compensation agreements must be structured. Philadelphia healthcare lawyers at Sidney L. Gold & Associates understand the intricacies of these regulations and can help you avoid costly penalties. Whether you are entering into a new employment agreement or are facing a Stark Law violation, our legal team has the knowledge and experience to help you achieve the best possible outcome. With offices conveniently located in Philadelphia, we serve clients throughout Pennsylvania, New Jersey and New York. Call us today at 215-569-1999 or contact us online to speak with a qualified Stark Law lawyer.