Hospitals and health systems should not be punished for trusting the advice of qualified legal counsel when determining the legality of a transaction under the Stark Law, according to a friend-of-the-court brief filed by the American Hospital Association and the South Carolina Hospital Association.
The brief, submitted to the 4th U.S. Circuit Court of Appeals Tuesday, supports Sumter, S.C.-based Tuomey Healthcare System, which was fined approximately $237 million after a federal judge ruled the system had violated both the Stark Law and the False Claims Act. The judgment was based largely on physician contracts Tuomey's lawyers had said were compliant with federal law, but were found not to be.
"Permitting hospitals to be penalized in this draconian fashion for obtaining and following the advice of legal professionals will jeopardize the ability of hospitals to meet the healthcare needs of their communities, especially in rural, medically underserved locations," according to the brief.
The AHA and SCHA see the issue as a Catch-22: hospitals need qualified counsel in determining legal liability, including Stark Law compliance, but such advice may still leave them vulnerable to regulatory action such as the charges levied against Tuomey. The letter advocates the charges against Tuomey be reversed, and other hospitals not be subject to similar prosecution in the future.
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