Tuomey says bankruptcy is its only option if forced to pay $70M - wistv.com - Columbia, South Carolina |

Tuomey says bankruptcy is its only option if forced to pay $70M

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SUMTER, SC (WIS) -

Tuomey Healthcare System says it will have to file bankruptcy if it pays $70 million requested by the federal government while it waits for an appeal to process in a guilty verdict.

The hospital was found guilty in May of violating the so-called Stark Law and the False Claims Act. The court ordered the hospital to pay $237 million in damages. After Tuomey officials said it could be forced to close if it paid that total, federal officials asked for a $50-million bond and $20 million in escrow while the appeal process continues.

Tuomey responded Thursday stating that its only option is to file bankruptcy in order to pay the $70 million. However, the federal government previously said the payment would not affect healthcare services.

In previous court agreements with the government, Tuomey was allowed to maintain $50 million in escrow while it appealed an earlier judgment. At that time, the hospital owed $5 million more in damages than it was ordered to pay in May.

The hospital also stated in its reply that the current $237 million owed will "likely be uncollectable and discharged in bankruptcy if the government prevails on appeal."

"Tuomey is worse off financially today than it was three years ago," court documents stated. "Yet the government is demanding more security for a stay without any legitimate justification."

The hospital continued to state in its response that "filing of bankruptcy would be very disruptive and have severe consequences to Tuomey's ability to provide healthcare to the Sumter community."

Tuomey requests the court allow the hospital to maintain $50 million in escrow instead of paying $70 million.

While Tuomey continues in the appeal process, it has to provide documents pertaining to its financials. WIS previously reported that the hospital wants to keep separation agreements for former CEO Jay Cox and former Vice President Gregg Martin confidential in court files. Cox and Martin left Tuomey in September.

Tuomey told WIS it could not provide the separation agreements because they are not subject to the Freedom of Information Act since it is a private business.

WIS investigated and found 990 forms Tuomey filed in recent years, which discloses the salaries and extra compensation for the former leaders.

Here's the breakdown:

  • 2008 – Cox's salary was $657,456, plus $56,974 extra; totaling $714,430. Martin's salary was $385,132, plus $51,870; totaling $437,002.
  • 2009 – Cox's salary was $835,713. Martin's salary was $499,803.
  • 2010 – Cox's salary was $655,102, plus $185,520; totaling $840,622. Martin's salary was $409,323, plus $122,280; totaling $531,603.
  • 2011 – Cox's salary was $838,646, plus $172,427; totaling $1,011,073. Martin's salary was $508,955, plus $123,042; totaling $631,997.

Tuomey is scheduled for a court hearing Feb. 3.

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