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

Tuomey Healthcare System (defendant), losing revenue as physicians began performing outpatient surgery in their own offices instead of at the hospital, offered part-time employment contracts under which physicians' pay was largely a productivity bonus equal to 80 percent of their collections. Tuomey had been advised this arrangement raised serious concerns under the Stark Law and the False Claims Act. Dr. Michael Drakeford (plaintiff) refused to sign, believing it violated the Stark Law's restrictions on physician compensation tied to referrals, and later sued, arguing Tuomey's Stark Law violations meant it knowingly submitted false Medicare claims. The jury found Tuomey liable, and Tuomey appealed.