Justice Department, Tuomey Healthcare seek settlement in $239 million false claims case

The U.S. Department of Justice has offered to settle a $237 million judgment against Tuomey Healthcare System, the Sumter-based hospital system said Thursday.

The judgment against Tuomey fined the hospital for submitting $39 million in false claims to Medicare to cover physicians fees. The fine has been a threat to Tuomey’s ability to continue operating, the hospital has said.

Tuomey is studying the settlement offer, the hospital said. While hospital officials did not say when they might accept or reject the offer, a federal court filing on Thursday indicated settlement negotiations could conclude by Oct. 9.

Meanwhile, Tuomey continues its discussions to merge with Palmetto Health. The two hospital systems “are applying their best efforts toward finalizing our binding agreement,” Michelle Logan-Owens, Tuomey Healthcare System president and CEO, said in a statement.

Tuomey and Palmetto Health, which have been negotiating a merger since February, had planned to announce a final merger agreement by Thursday.

“While most documents necessary to achieve the partnership have been completed, a few details remain before we can sign,” Logan-Owens’ statement said. “We are optimistic that these will be completed very soon.”

Tuomey disclosed its intent to form a partnership with Palmetto Health in February, though it has not been clear how the $237 million judgement would be handled. Instead, both health care systems have stressed the strong commitment to community shared by the two institutions and the opportunity a merger presented to strengthen health care in the region.

Tuomey, meanwhile, had been negotiating a deal with the Justice Department aimed at reducing the judgment. Tuomey has said it will file for bankruptcy if the judgment, rendered in 2013 and upheld last year by a federal appeals court, is not reduced, according to court records.

“Tuomey Healthcare received a draft proposed settlement offer from the Department of Justice late Friday, and our attorneys are reviewing it now and are in consultation with us regarding the rights, obligations, and duties contained in the draft settlement,” Logan-Owens’ statement said.

The Justice Department, in a filing entered Thursday in U.S. District Court, asked for a delay until Oct. 9 in the disbursement of a $40 million security deposit put up by Tuomey for the $237 million judgment. The money was to be dispersed Thursday.

The not-for-profit health system, anchored by the 301-bed Tuomey Regional Medical Center in Sumter, had to look for a partner in order to avoid closing the hospital system, Tuomey has said.

In January 2015, before announcing its intent to seek to merge with Palmetto Health, Tuomey had indicated in court filings that paying the full judgement might force the hospital to close its doors. Acquisition by a for-profit system was a preferred alternative, Tuomey asserted in the courts.

This story was originally published October 1, 2015 at 8:43 PM with the headline "Justice Department, Tuomey Healthcare seek settlement in $239 million false claims case."