A South Carolina hospital that hired staff surgeons to perform procedures at its surgery center and paid them based on the volume of their referrals may face $44.8 million in damages after a federal jury found its practices violated the Stark Law.

The charges against Sumter-based Tuomey Healthcare System were brought by orthopedic surgeon Michael Drakeford, MD, on behalf of the government in a whistleblower lawsuit. The suit alleged that Tuomey's actions, which it has engaged in for the past 5 years, were an attempt to stem competition from physician-owned ASCs in the area.

Dr. Drakeford, who operates at the Palmetto Orthopaedic and Sports Medicine Center in Sumter, notified federal investigators after Tuomey repeatedly approached him with the arrangement.

The contracts Tuomey made with 19 part-time surgeons on its staff not only violated Stark Law prohibitions against physician self-referrals, federal prosecutors argued, but the resulting claims constituted Medicare fraud.

However, the jury found Tuomey not guilty of filing fraudulent Medicare claims after the 4-week trial, a split decision the hospital system cast as a win in a statement posted on its Web site Tuesday. "Although the jury did find that Tuomey violated the Stark Law, there were no false claims. Therefore, there was no Medicare fraud," says the statement, which makes no mention of the nearly $45 million penalty the judge may levy on the hospital for the Stark violations.

David Bernard