On July 8, 2020, the United States Department of Justice – Office of Public Affairs announced that Oklahoma Center for Orthopedic and Multi-Specialty Surgery (OCOM), a specialty hospital in Oklahoma City, its part-owner and management company, USP OKC, Inc. and USP OKC Manager, Inc., Southwest Orthopedic Specialists, PLLC (SOS), and two SOS physicians, will pay a total of $77.2 Million to resolve allegations under the False Claims Act and the Oklahoma Medicaid False Claims Act of conduct that resulted in the submission of false claims to the Medicare, Medicaid and TRICARE programs.
The settlement was the result of a Federal qui tam lawsuit filed by a whistleblower that included allegations of improper remuneration in exchange for patient referrals in the form of:
(i) free or below-fair market value office space, employees, and supplies;
(ii) compensation in excess of fair market value for the services provided by SOS and certain of its physicians;
(iii) equity buyback provisions and payments for certain SOS physicians that exceeded fair market value; and
(iv) preferential investment opportunities in connection with the provision of anesthesia services at OCOM.
Notably, as part of the monetary settlement, two individual SOS physicians will pay a combined settlement amount of over $6 Million.
An additional component of the settlement required OCOM and SOS to each enter into 5-year Corporate Integrity Agreements (CIAs) with the HHS – Office of Inspector General. The CIAs require, among other things, that OCOM and SOS maintain a compliance program, and hire an Independent Review Organization to review arrangements entered into by, or on behalf of, their respective entities. The CIAs also increase individual accountability by requiring the parties’ key executives to issue compliance-related certifications.
With respect to the Federal health care programs, business practices that may pass muster in some industries, such as rewarding individuals who refer clients, are illegal. Suspect arrangements include but are not limited to: the payment of compensation to a physician that exceeds the fair market value of the services actually provided and the provision of free or below-market rent.
This case underscores the importance of careful planning with respect to financial arrangements between and among parties in the healthcare space. Financial arrangements between physicians and hospitals to which they refer must be reviewed by competent healthcare counsel to mitigate the risk of civil, and potentially criminal, liability. For parties that have already exchanged improper remuneration, the HHS-OIG’s Self-Disclosure Protocol may be an avenue to mitigate some of the more severe penalties that often result from investigations related to government audits or qui tam lawsuits.
How Frier Levitt Can Help
The enforcement climate for improper financial arrangements remains robust, and as this case illustrates, the penalties may be significant. For more information, call Frier Levitt to speak with an attorney.
