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Michael K. Drakeford, United States ex rel. v. Tuomey

United States Court of Appeals for the Fourth Circuit
792 F.3d 364 (2015)


Tuomey Healthcare System (Tuomey) (defendant) was a nonprofit hospital. Most doctors who worked at Tuomey were not employed by the hospital. Tuomey was losing revenue, as physicians who previously performed outpatient surgery at Tuomey began doing so in their own offices. To stop this loss, Tuomey decided to enter into part-time employment contracts with the physicians. Under the contracts, the physicians’ salaries were adjusted from year to year based on the amount the physician collected. The bulk of the physicians’ compensation was earned through a productivity bonus, which paid the physicians 80 percent of their collections for the year. Tuomey had received counsel that this arrangement raised significant red flags in regard to the False Claims Act and the Stark Law. Dr. Michael Drakeford (plaintiff) refused to enter into the contract, believing that it violated the Stark Law’s prohibition on particular methods of physician compensation. Drakeford later brought suit against Tuomey, arguing that the Stark Law violation meant that Tuomey had knowingly submitted false claims for payment to Medicare, in violation of the False Claims Act. The jury found that Tuomey did submit false claims. Tuomey appealed, arguing that it did not violate the False Claims Act. The United States Court of Appeals for the Fourth Circuit heard the appeal.

Rule of Law


Holding and Reasoning (Diaz, J.)

Concurrence (Wynn, J.)

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