Southwest Orthopaedic Specialists, an Oklahoma City Hospital, and a Hospital Management Company Will Pay $72.3 Million Over Anti-Kickback and Stark Law Violations

An Oklahoma hospital, its manager and part-owner, the physician group that created the hospital, and two of the group's physicians will collectively pay $72.3 million to settle claims that they conspired to defraud the federal government and the State of Oklahoma.  

Southwest Orthopaedic Specialists, an Oklahoma City Hospital, and a Hospital Management Company Will Pay $72.3 Million Over Anti-Kickback and Stark Law Violations

The alleged kickback scheme was described in detail in a False Claims Act lawsuit filed against several defendants, including the Oklahoma Center for Orthopaedic and Multi-Specialty Surgery (OCOM), a surgical hospital; USP, a hospital management company; Southwest Orthopaedic Specialists (SOS), a group of orthopaedic surgeons; and two SOS physicians named Anthony L. Cruse and R.J. Langerman. 

According to the whistleblower complaint, SOS, OCOM, and USP, the corporation that controls OCOM, conspired to defraud Medicare, Medicaid, TriCare, and Blue Cross Blue Shield Federal.

Southwest Orthopaedic Specialists Administrator Blows The Whistle

Whistleblower Wayne Allison, an Oklahoma resident, was an administrator at Southwest Orthopaedic Specialists between 2002 and 2017. Unfortunately for the defendants, while working at SOS, Allison went to law school, graduating Summa Cum Laude in 2007. The following year, he was admitted to the Oklahoma Bar. 

Being well-versed in the law and carrying out administrative tasks at SOS, Allison was in an ideal position to detect fraud against government healthcare programs like Medicare and Medicaid. According to his whistleblower complaint, "Through [his] employment with Defendants and his personal investigation, [Allison] acquired direct personal knowledge of and non-public information about Defendants’ fraud." 

Allison's whistleblower lawsuit alleged that the defendants "consistently and deliberately based 

their decision-making on profit and greed in knowing and reckless disregard of the law" and that their violations rendered over $150 million in billings to government programs illegal. 

SOS-OCOM's Alleged Schemes

According to the lawsuit, the improper financial relationships between OCOM and SOS tainted  "all reimbursements OCOM received from the government resulting from referrals from SOS Doctors from at least 2007." The alleged misconduct involved violations of the Stark Law, the Anti-kickback Statute, the Federal False Claims Act, and the Oklahoma False Claims Act.

The whistleblower complaint mentions over a dozen different "schemes" allegedly designed by the defendants to illegally increase Medicare, Medicaid, and TriCare revenue.

  • The Equity Scheme allegedly "used highly valuable OCOM Equity—which should have been made available to all physician owners of OCOM (including approximately eighteen non-SOS physicians)—to reward and incentivize the SOS Doctors who referred to OCOM the majority of its business."
  • The Employment Contract Scheme allegedly involved "an improper physician employment contract and space rental arrangement, whereby OCOM bore all the cost, risk, and burden of recruiting new SOS Doctors while SOS enjoyed only the upside."  
  • The Surgical Scrub Scheme was an arrangement by which OCOM allegedly "paid the majority of the cost of personal medical assistants for [co-defendants] Cruse and Langerman because Cruse and Langerman were the most profitable and influential referring physicians." 
  • The Sham Lease Scheme is another alleged, illegal arrangement by which OCOM leased an empty building owned by Cruse and Langerman for an above-market price to reward them "for their high volume of high-value referrals." The lease was perpetuated even after OCOM stopped using the building.  
  • The Office Space Scheme and the Credit Card Scheme refer to kickbacks offered to Cruse. 
  • The Anesthesia Company Scheme involves the joint creation of  "Anesthesia Partners of Oklahoma" by OCOM and SOS. The company was allegedly used by the defendants to "refer designated health services to themselves."  
  • The E.R. Call Scheme refers to the allegedly illegal financial arrangements that existed between SOS and Integris, an Oklahoma hospital corporation. According to the lawsuit, "defendants structured an unlawful contract for E.R. exclusivity whereby Integris offered the SOS doctors exclusive rights to perform E.R. services in an Integris facility, and in exchange, the SOS Doctors traded performing more non-trauma, elective surgeries at Integris."
  • The Ultrasound Scheme refers to the defendants' alleged submission of "false claims for ultrasound needle guidance that was 
    1. performed when not medically necessary; 
    2. never actually performed; or 
    3. performed by a Physician Assistant (“P.A.”) without the required supervision."   

Whistleblowers Can Help Prevent Healthcare Fraud

The alleged misconduct took place between 2006 and 2018. In a press release announcing the settlement, the Oklahoma Attorney General said, "Kickback schemes like this drain valuable resources from the federal and state healthcare systems, which go to our most vulnerable. This settlement is substantial and will hopefully send a clear, concise message to those who want to defraud the system–that we will not tolerate these illegal acts in our state. I am pleased we were able to work with our federal partners to achieve this successful outcome."

Healthcare whistleblowers with information about Medicare, Medicaid, and TriCare fraud can file a lawsuit under the False Claims Act. Like Oklahoma, most U.S. states have their own False Claims Act legislation. A successful whistleblower can get a substantial percentage of both the federal government's recoveries and the taxpayer funds recovered by each individual state. 

In the case of the federal FCA, whistleblower awards range between 15 and 30 percent of the total recoveries. The SOS whistleblower will likely receive a multimillion-dollar award.

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