Linda Baumann Comments on the Stark Reality of a Post-Tuomey World

The in-depth article discusses the ramifications of the $237.5 million amended judgment against Tuomey Healthcare System that sent a “wake-up call to hospitals, physicians and health care attorneys who deal with physician employment contracts and who must make sure they don't run afoul of the federal physician self-referral law."

The article reported “it is clear that hospitals and practitioners alike will have to re-evaluate their physician hiring and compensation practices in light of the government's interpretation of the Stark law and take steps to ensure that their exposure to similar lawsuits is minimized.” The litigation is on appeal to the US Court of Appeals for the Fourth Circuit, after the damages award was reduced from the $277 million judgment entered following a jury trial.

One particular aspect of the case that has draw attention are the compensation packages Tuomey offered specialist physicians that were deemed “commercially unreasonable” because Tuomey would lose money on the contracts based purely on the expected billings of the physicians.

Ms. Baumann told Bloomberg BNA that “there’s a natural tendency on the government’s part to push [the Stark Law] as far as it will go” now that the government has realized how powerful  a weapon it can be, particularly in conjunction with the False Claims Act.  She added that “hospitals considering hiring physicians or a practice group need to be able to clearly demonstrate that the reason for making the move was for commercially reasonable purposes unrelated to potential referrals” and that “it’s always good to have an independent appraisal.”  She added that the Tuomey case demonstrated that “there is no bright line; there’s a danger zone,” and the only really safe approach is to make sure “there are no red flags” in the physician employment process.

To read the entire article, click here.