United States Ex Rel. Drakeford v. Tuomey Healthcare System, Inc.
2012 U.S. App. LEXIS 6444
| 4th Cir. | 2012Background
- U.S. sued Tuomey under FCA with equitable claims for payment by mistake of fact and unjust enrichment tied to Stark Law violations.
- Tuomey contracts with 19 physicians provided outpatient procedures; Tuomey billed Medicare/Medicaid for facility fees and professional fees.
- Jury found Stark Law violation but no FCA liability; district court set aside verdict and ordered new FCA trial, and awarded equitable relief based on the Stark Law finding.
- District court awarded $44,888,651 to the United States on Counts IV and V and granted post-judgment interest; Tuomey appealed.
- Seventh Amendment issue: district court relied on jury Stark Law finding after vacating the jury verdict, raising right-to-jury-trial concerns.
- Fourth Circuit vacated judgment on equitable claims and remanded for retrial, addressing whether the Stark Law issue should have been decided by a jury first.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did district court violate Seventh Amendment by basing equitable relief on a jury finding later set aside? | Tuomey’s rights to jury determination on common issues were violated. | District ruling integrated with re-trial plan; no prejudice from prior verdicts. | Yes; Seventh Amendment rights were violated; judgment vacated. |
| Whether the common issue of Stark Law violation must be decided by a jury before equitable relief. | Common issue affects FCA and equitable claims; jury should determine. | Judge may resolve some issues in equity after voiding prior verdicts. | Remanded; issues to be tried on retrial with proper jury consideration. |
| Whether facility component referrals constitute a 'referral' under Stark Law. | Facility component referrals fall within Stark Law as defined by regulations. | Argument contested; distinctions between component and referral are contested. | Question for remand; not decided on the current record. |
| Whether compensation taking into account volume/value of anticipated referrals triggers Stark volume/value standard. | Compensation tied to anticipated referrals violates fair market value. | Anticipated referrals should not by themselves conclude a violation; depends on face of contract. | Qualified; jury to decide if contracts on their face took volume/value into account; remand guidance provided. |
| Is the majority’s discussion on 'volume or value' standards advisory or binding on remand? | Discussion pertains to legal standards guiding retrial. | Court cannot issue advisory opinions at this stage; issues depend on remand record. | Remand guidance permissible; not a final advisory ruling on remand. |
Key Cases Cited
- Beacon Theatres, Inc. v. Westover, 359 F.2d 500 (U.S. 1959) (joint trial of legal and equitable claims; right to jury preserved for legal issues)
- Dairy Queen, Inc. v. Wood, 369 U.S. 469 (U.S. 1962) (separation of equitable and legal claims; when legal claims exist, must be resolved by jury first)
- Lytle v. Household Mfg., 494 U.S. 545 (U.S. 1990) (when legal and equitable claims share common facts, jury should decide legal issues first)
- Pandazides v. Va. Bd. of Educ., 13 F.3d 823 (4th Cir. 1994) ( Seventeenth Amendment jury-trial principles; review de novo for Seventh Amendment issue)
- Frahm v. United States, 492 F.3d 258 (4th Cir. 2007) (contract interpretation is a question of law)