News-At-A-Glance: Tuomey Given Go-Ahead to File Bankruptcy

Filing for bankruptcy as early as this month may be the only option left for Tuomey Healthcare System in Sumter, S.C., if several upcoming legal decisions go against it. According to reports from several newspapers and news agencies, the board of trustees told Chief Executive Officer Michael Schwartz that he could pursue Chapter 11 bankruptcy if needed. The dire financial situation for Tuomey began when a jury found the hospital had violated the Stark law and False Claims Act and entered a $237 million judgment against Tuomey. Last month a federal district court ordered Tuomey to pay $70 million while its appeal was ongoing. Tuomey appealed the ruling saying it would cause the hospital, which is in a rural setting and provides services to local patients, to close its doors. Filing for bankruptcy or posting large financial losses could lower the health system’s already poor credit rating. According to a blog post by  Pete Strom of Strom Law Firm LLC, Tuomey collected $39 million in false claims and Medicare fraud between 2005 and 2009 based on inaccurate billing for doctors’ procedures. A previous trial in 2005 found Tuomey guilty of paying doctors full-time wages for part time employment, which the jury ruled as a kickback.