Health care company expects to pay $66 million to settle whistleblower case involving alleged kickbacks to OKC surgeons
Tenet Healthcare Corporation expects to pay $66 million to settle a whistleblower lawsuit involving alleged kickbacks to Oklahoma orthopedic surgeons, the company has told investors.
"In October 2019, we reached an agreement in principle with the DOJ (U.S. Department of Justice) to resolve the ... lawsuit and related investigations for approximately $66 million," Tenet disclosed in a recent quarterly report filed with the federal Securities and Exchange Commission.
The company said it has set aside a $68 million reserve to pay the proposed settlement, which includes an additional $2 million for attorneys' fees and related costs.
The final settlement is subject to further approvals by the Justice Department and other government agencies, the company said, adding that it expects a final agreement could be reached and money paid as early as the first quarter of 2020.
Tenet's tentative settlement relates to an Oklahoma federal court case where a former administrator of Southwest Orthopaedic Specialists PLLC, has accused his former employer and nine of its doctors of participating in a series of complex kickback and illegal compensation arrangements involving Oklahoma hospitals and medical groups.
"Defendants' unlawful conduct and fraudulent schemes arise from their entangled history of using their patient referrals and various entities as a self-interested, profit oriented, multimillion-dollar money-making machine," whistleblower Wayne Allison alleged in the lawsuit.
Since no court judgment or final settlement has been entered in the lawsuit yet, it is unclear whether Tenet is the only entity that currently has an agreement in principle with the government that would require it to pay money.
Oklahoma City attorney Michael Burrage, who represents the whistleblower in the case, said Department of Justice officials have asked him not to publicly discuss the case because negotiations are continuing.
Local attorney Richard Mullins, who represents the doctors' group, also declined to discuss the status of settlement talks, referring a reporter to court filings.
The doctors who are accused of wrongdoing in the case include Anthony L. Cruse, R.J. Langerman Jr., Daniel J. Jones, Mehdi Adham, Derek West, Brian Levings, Christopher Shane Hume, Brad Reddick and Kristopher Avant. Jones and Adham are have M.D. degrees, the others are doctors of osteopathic medicine, the lawsuit says.
Integris Ambulatory Care Corp., Integris South Oklahoma City Hospital Corp., Oklahoma Center for Orthopaedic & Multispecialty Surgery LLC, Tenet, Anesthesia Partners of Oklahoma LLC, USP Oklahoma Inc. and UAP of Oklahoma LLC are identified as corporate entities that allegedly participated in various improper schemes.
The lawsuit alleges that in 2002, a group of Southwest Orthopaedic Specialists' doctors opened a surgical specialty hospital called the Oklahoma Center for Orthopaedic and Multispecialty Surgery LLC. In 2004, the doctors sold a partial interest in the hospital to a national health care provider, USP Oklahoma Inc., which is a subsidiary of United Surgical Partners International Inc., the lawsuit states. USP then took over management of the hospital. Tenet became involved when it acquired ownership of USP.
Together, the doctors and hospital officials "contrived multiple schemes to pay unlawful kickbacks, compensation, perks and benefits" to doctors in the group who referred the "greatest volume and value of federally reimbursed health care service," the lawsuit alleges.
The hospital's kickbacks to doctors came in a variety of forms, including giving high-referring doctors preferential treatment in purchasing equity in the hospital, paying the costs of recruiting surgeons to the doctors' group, leasing an empty and unneeded building from two doctors who referred a high volume of patients and providing a doctor with free office space in exchange for his referrals and influence, the lawsuit alleges.
It also alleges that the hospital allowed one doctor to use his personal credit card to make hospital surgical equipment purchases so the doctor could accumulate reward points that he used to finance flights to vacation destinations.
Another allegation in the lawsuit is that Southwest Orthopaedic Specialists' doctors and the Oklahoma Center for Orthopaedic & Multispecialty Surgery formed an anesthesia company called Anesthesia Partners of Oklahoma LLC, and made it the exclusive anesthesia service provider for the hospital.
"In doing so, they created a textbook self-referring financial and kickback relationship," the lawsuit alleges.
Anesthesiologists across the nation are closely watching what happens in this case because similar ownership structures for anesthesia services have surfaced in a number of states, said Mark Weiss, a Dallas attorney who has a number of anesthesiologists and physician groups as clients.
"I know it's a big issue in Oklahoma," Weiss said. "It's a big issue in every state."
In another alleged kickback scheme, the lawsuit accuses the Southwest Orthopaedic Specialists' doctors of entering into an improper arrangement with Integris Ambulatory Care Corp. and Integris South Oklahoma City Hospital Corp.
"Defendants structured an unlawful contract for E.R. services in an Integris facility, and in exchange, the SOS doctors traded performing more non-trauma, elective surgeries at Integris," the lawsuit alleges.