Former Tuomey Healthcare CEO Ralph Cox pays $1 million over illegal referrals
Cox will also be banned from participating in federal healthcare programs for four years, including management of administrative services.
Former Tuomey Healthcare CEO Ralph Cox.
Ralph J. Cox III, the former CEO of Tuomey Healthcare System in Sumter, South Carolina will pay $1 million to settle fraud claims that tied to illegal physician referrals, the Department of Justice announced Tuesday.
Cox will also be banned from participating in federal healthcare programs for four years, including management of administrative services that would be paid for by federal healthcare dollars.
The government alleged that Cox caused Tuomey to enter into contracts with 19 specialist physicians requiring them to refer their outpatient procedures to Tuomey out of fear that the system was losing outpatient procedures to a new freestanding surgery center. Tuomey paid the physicians compensation that "far exceeded fair market value" and included funds Tuomey received from Medicare for the referred procedures, the DOJ said.
[Also: Running list of notable 2016 healthcare frauds]
During the month-long trial in April 2013 that ended in a $237.4 million judgement against Tuomey, the government argued Cox ignored and suppressed warnings from one of Tuomey's attorneys that the physician contracts were "risky" and raised "red flags," the DOJ said. The South Carolina jury found that Tuomey had violated Stark Law with the physician referral contracts and also that Tuomey had filed more than 21,000 false claims with Medicare.
Stark Law prohibits hospitals from billing Medicare for certain services, including inpatient and outpatient hospital care, that have been referred by physicians with whom the hospital has an improper financial relationship. It includes exceptions for many common hospital-physician arrangements but generally requires any payments made to a referring physician be at "fair market value" for the services and not take into account the volume or value of the physician's referrals to the hospital.
Cox was fired as Tuomey's chief executive officer in the fall of 2013, according to the DOJ.
Twitter: @BethJSanborn
