Oklahoma City Hospital, Management Company, And Physician Group To Pay $72.3 Million To Settle Federal And State False Claims Act
The Justice Department’s enforcement programs are resuming – False Claims Act, FCPA and other programs will continue. The rate of enforcement, however, is subject to change once again from the impact of the pandemic. As the pandemic continues to spread, DOJ focus on pandemic related fraud and other scams will divert resources from “traditional” priorities.
DOJ’s commitment to False Claims Act prosecutions in the health care sector is well -established. Approximately 80 to 90 percent of all False Claims Act prosecutions involve health care companies – pharmaceuticals, medical devices and health care providers. That percentage may decline relative to expected increases in prosecution of PPP loans and other pandemic-related government spending programs. While the absolute number of cases may not decline, the relative percentage of total False Claims Act recoveries may fall.
The latest health care prosecution involved the Oklahoma Center for Orthopedic and Multi-Specialty Surgery (OCOM), a specialty hospital in Oklahoma City, Oklahoma its part-owner and management company, USP OKC, Inc. (USP), Southwest Orthopedic Specialists, a physician group (SOS), and two SOS physicians. The above-listed group agreed to pay $72.3 million to resolve federal and Oklahoma Medicaid False Claims violations surrounding improper kickbacks and Stark Law payments between OCOM and SOS. The anti-kickback and Stark Law are intended to ensure that physicians’ medical judgments are not based on improper incentives to the detriment of patients.
Between 2006 and 2018, OCOM and USP made improper “payments” to SOS and some of its physicians in exchange for patient referrals to OCOM. The payments included: (1) free or below fair market value office space, employees and supplies; (2) compensation in excess of fair market value for SOS physician services; (3) equity buyback provisions and payments for certain SOS physicians that exceeded fair market value; and (4) preferential investment opportunities in the provision of anesthesia services at OCOM. In addition, the settlement included violations arising out of USP’s preferential offering of investment opportunities to physicians at four surgery facilities in Texas.
Under the settlement, USP paid $60.86 million to DOJ and $5 million to the State of Oklahoma, and $206k to the state of Texas. SOS and two physicians paid $5.7 million to DOJ and $495k to the State of Oklahoma.
OCOM and SOS each entered into a five year Corporate Integrity Agreement with the US Department of Health and Human Services, Office of the Inspector General. The CIAs require that OCOM and SOS each maintain a compliance program, hire an Independent Review Organization to review arrangements between physicians and provider organizations. Each year key executives will be required to execute compliance-related certifications.
The enforcement action was the result of a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.