OKC hospital, management company and physician group to pay $72.3 million settlement over alleged kickback scheme

Jul. 9--An Oklahoma City hospital, physician group and management company have reached a $72.3 million settlement over allegations of a kickback scheme brought forth by a whistleblower.

Oklahoma Center for Orthopaedic and Multi-Specialty Surgery, and its part-owner and management company, USP OKC Inc. and USP OKC Manager Inc., along with Southwest Orthopaedic Specialists and two of their physicians, will pay the massive settlement to resolve allegations under the False Claims Act and the Oklahoma Medicaid False Claims Act.

The settlement is over allegations of improper relationships between the hospital and physicians that led to the submission of false claims to the Medicare, Medicaid and TRICARE programs, the U.S. Justice Department announced Wednesday.

Between 2006 and 2018, the hospital and management company were alleged to have provided improper remuneration to the physician group in exchange for patient referrals to the hospital in the form of free or below-fair market value office space, employees and supplies.

The alleged kickback scheme also included compensation in excess of fair market value for services provided by the physician group, and equity buyback provisions and payments for certain physicians, which exceeded fair market value.

Allegations also included preferential investment opportunities in connection with the provision of anesthesia services at the hospital -- Oklahoma Center for Orthopaedic and Multi-Specialty Surgery.

The alleged conduct resulted in the submission of claims for services provided to illegally referred patients, in violation of the False Claims Act and the Oklahoma Medicaid False Claims Act.

Authorities said the settlement resolves issues arising out of the management company's preferential offering of investment opportunities to physicians at four surgery facilities in Texas.

The management company, USP, will pay $60.86 million to the United States, $5 million to the state of Oklahoma, and $206,000 to the state of Texas.

The physician group -- SOS -- and two of its physicians, Anthony L. Cruse and R.J. Langerman, Jr., will pay $5.7 million to the United States, and $495,619 to the state of Oklahoma.

Along with the civil settlement, the hospital and physicians group each entered into five-year corporate integrity agreements with the U.S. Department of Health and Human Services -- Office of Inspector General.

The agreements require the hospital and physicians' group to maintain a compliance program and hire an independent review organization to review arrangements entered into by or on behalf of their respective entities, authorities said.

"It is critical that we protect the integrity of federal health care benefit programs," U.S. Attorney Timothy J. Downing for the Western District of Oklahoma said. "Patients deserve care based on good medicine and informed choice, not the corrupting influence of money and other benefits. No matter how complex and intertwined modern healthcare economics become, we are committed to ensuring that untainted care is always provided."

The allegations resolved by the settlement were brought forth by a whistleblower in a lawsuit filed under provisions of the False Claims Act, which permits private parties to sue on behalf of the United States for false claims and to receive a share of any recovery.

The whistleblower also made allegations under the Oklahoma Medicaid False Claims Act. The whistleblower share to be awarded in the case has not yet been determined, authorities said.

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.

The Physician Self-Referral Law, also known as the Stark Law, prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper financial arrangement.

The laws help ensure physician medical judgments are not compromised by improper financial incentives.

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