After the federal government’s victory against Tuomey Hospital, we have seen an increasing number of large False Claims Act (FCA) settlements with hospitals involving Stark Law allegations. Despite the intricacies of Stark Law compliance, the U.S. Department of Justice (DOJ) has not shown much leniency in its treatment of these cases, as shown by two
DOJ’s “Yates Memorandum” Calls for Increased Focus on Individuals in Investigating Allegations of Both Criminal and Civil Corporate Wrongdoing
On September 9, 2015, the U.S. Department of Justice (DOJ) released a memorandum to prosecutors nationwide regarding “Individual Accountability for Corporate Wrongdoing,” authored by Deputy Attorney General Sally Q. Yates. Dubbed the “Yates Memorandum,” this missive consolidates both long-standing DOJ policy and newly minted guidance for prosecutors and civil enforcement attorneys that could significantly alter
Huge Stark Law Hospital Settlements and Physician Culpability – The New Normal Post-Tuomey?
After the federal government’s victory against Tuomey Hospital, we have seen an increasing number of large False Claims Act (FCA) settlements with hospitals involving Stark Law allegations. Relators are even citing, as evidence of ongoing recklessness, that hospital executives have been e-mailing articles about the Tuomey case to their staff. Given the Stark Law’s intricate requirements, it is un-surprising that many hospitals are presented with Stark Law compliance questions. However, the U.S. Department of Justice (DOJ) has not shown much leniency in its treatment of these cases, as shown by two recent settlements.
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The Health Care Industry and DOJ’s New Corporate Conduct Enforcement Guidelines
Health care leaders should closely note the new guidelines on corporate conduct released on September 9, 2015 by the Department of Justice (DOJ) (Memorandum from Sally Quillian Yates, Deputy Attorney General, U.S. Department of Justice, September 9, 2015, Individual Accountability for Corporate Wrongdoing (Guidelines), available at www.justice.gov/dag/file/769036/download). These Guidelines reflect a substantially increased focus
The Health Care Industry and DOJ’s New Corporate Conduct Enforcement Guidelines
Health care leaders should closely note the new guidelines on corporate conduct released on September 9, 2015 by the Department of Justice (DOJ). These Guidelines reflect a substantially increased focus on individual accountability for corporate wrongdoing, both civil and criminal, and on the importance of corporate cooperation in the context of governmental investigations. It is
Can Satisfying A Regulatory Requirement Now Equate To Providing Illegal Remuneration?
Defending False Claims Act litigation is often a costly budget item. The disposal of weak cases by the government through the intervention decision making process has always been a critical safety valve for non-culpable defendants. Two of the more concerning trends in False Claims Act litigation, however, are (1) the increasing likelihood of relators pursuing
Amarin Ruling Solidifies Off-Label Marketing Options but Raises Questions About False Claims Act Enforcement Action
The Southern District of New York recently ruled in Amarin Pharma, Inc. et al. v. Food and Drug Administration, et al. that a drug company may engage in “truthful and non-misleading speech” about off-label uses of an approved drug without the threat of a misbranding action under the Federal Food, Drug, and Cosmetic Act. No.
Fourth Circuit Rejects ‘Advice of Counsel’ Defense
A major new decision from the U.S. Court of Appeals for the Fourth Circuit has important implications for the availability of the “reliance of counsel” defense, particularly in situations involving the application of complex statutes and regulations.
In U.S. ex rel. Drakeford v. Tuomey, the Fourth Circuit affirmed the District Court’s prior judgment of
Tuomey’s Appeal of $237M False Claims Act Judgment Denied by the Fourth Circuit
The US Court of Appeals for the Fourth Circuit affirmed the trial court’s May 2013 decision that Tuomey Healthcare System, Inc., a hospital and health system based in Sumter, South Carolina, submitted 21,730 false claims, claims prohibited by the Stark Law, to the Medicare program. The court rejected Tuomey’s request for a new trial based
Fourth Circuit Upholds Judgment of Over $237 Million against Tuomey Healthcare System
On July 2, 2015, the U.S. Court of Appeals for the Fourth Circuit affirmed the U.S. District Court for the District of South Carolina’s judgment of $237,454,195 in damages and penalties against Tuomey Healthcare System in United States ex rel. Drakeford v. Tuomey Healthcare System, Inc. (No. 13-2219). The judgment followed a rare False Claims Act (FCA) trial, after which the jury found Tuomey liable for submitting 21,730 false claims to Medicare. While the Fourth Circuit’s Tuomey decision addressed many claims of error advanced by Tuomey on appeal, this post highlights the court’s response to Tuomey’s challenges based on the “advice of counsel” defense and on the computation and size of the judgment.
Tuomey was alleged to have entered into part-time employment contracts with physicians that violated the Stark Law. After one of the physicians expressed compliance concerns about the structure of the proposed arrangement, Tuomey sought Stark Law compliance advice about the contracts from several attorneys – one of whom, Kevin McAnaney, indicated that the contracts raised “red flags” under the Stark Law. McAnaney was jointly retained by Tuomey and the physician, Drakeford, after Tuomey received a legal opinion from its longstanding counsel that the contracts were Stark compliant. Despite McAnaney’s advice, Tuomey elected to move forward with the contracts. Drakeford subsequently filed an FCA qui tam lawsuit against Tuomey, and the extensive litigation ensued.
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