Feds, surgical groups reach $77.2M settlement over allegedly illegal referral arrangement

Angie Stewart -   Print  |

Oklahoma City-based Oklahoma Center for Orthopaedic and Multi-Specialty Surgery agreed to resolve allegations that it made improper payments in exchange for patient referrals over a 12-year period, the Department of Justice announced July 8.

The specialty hospital, along with its part-owner and management company USP OKC and USP OKC Manager, Oklahoma City-based Southwest Orthopaedic Specialists, and two SOS physicians, will pay $77.2 million to settle whistleblower claims that their relationships were improper.

In violation of the False Claims Act and the Oklahoma Medicaid False Claims Act, OCOM and USP allegedly induced referrals from SOS and certain SOS physicians by providing:

  • Office space, employees and supplies for free or below fair market value
  • Payment that exceeded fair market value for the services rendered
  • Equity buyback provisions and payments that exceeded fair market value
  • Preferential investment opportunities related to anesthesia services at OCOM

OCOM and USP made these improper payments to SOS and certain physicians between 2006 and 2018, resulting in the submission of false claims to Medicare, Medicaid and Tricare, the lawsuit alleges. Federal prosecutors also say USP gave preferential investment opportunities to physicians at four surgery facilities in Texas.

To resolve the allegations, USP will pay $60.86 million to the federal government, $5 million to the state of Oklahoma, and $206,000 to the state of Texas. SOS and two of its physicians — Anthony Cruse, DO, and R.J. Langerman Jr., DO — will pay $5.7 million to the U.S., and $495,619 to Oklahoma. The whistleblower's share of the settlement hasn't yet been determined.

OCOM and SOS also entered into five-year Corporate Integrity Agreements with the HHS Office of Inspector General, which require them each to maintain a compliance program, hire an Independent Review Organization to review arrangements, and uphold compliance-related certifications.

The settlement is not a determination of liability, and the claims settled are allegations only.

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