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Hospital guilty of $39M Medicare fraud

COLUMBIA (AP) — A South Carolina hospital has been found guilty of collecting millions of dollars in false Medicare claims.

After a four-week trial in Columbia, a federal jury on Wednesday found that Tuomey Healthcare System signed doctors to lucrative, part-time contracts to ensure that they would get referral fees associated with those physicians’ procedures, according to a report by The Item of Sumter (http://bit.ly/10urxfq).

Paying physicians with part of the referral fees a hospital receives creates an illegal kickback under Medicare law. The contracts did not spell out the referral agreement, but prosecutors said the hospital agreed to pay those doctors well above market value.

Tuomey’s lawyers argued the contracts were legal and were part of the hospital’s effort to provide services to a medically underserved community.

Prosecutors said Tuomey collected $39 million in fraudulent Medicare claims between 2005 and 2009 based on those doctors’ procedures, according to the government. On top of that amount, a federal judge has ordered both sides to submit petitions on any additional penalties, fees and fines.

Tuomey has several weeks to decide if it will appeal. In his closing arguments, defense lawyer Matthew Hubbell said a verdict against Tuomey would “annihilate” the hospital.

The issues have been litigated before. In 2010, a jury found the hospital did not violate the False Claims Act but did rule that Tuomey should pay $45 million in damages for hiring the doctors for an outpatient surgery center so they would, in turn, refer more patients.

The trial judge let the jury’s referral finding stand but later ruled he had wrongly excluded some testimony and ordered a new trial. Last year, a federal appeals court tossed out the damages ruling, saying it violated Tuomey’s constitutional right to a jury trial on the issue and had been nullified when the jury’s verdict was set aside.

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