Tenet-affiliated surgical hospital agrees to $72.3M settlement with DOJ over kickback suit

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An Oklahoma specialty hospital affiliated with Tenet Healthcare agreed to pay a $72.3 million settlement regarding a whistleblower lawsuit involving alleged kickbacks to surgeons. (Tenet Healthcare)

An Oklahoma specialty hospital affiliated with Tenet Healthcare was among parties that agreed to pay $72.3 million to settle a whistleblower lawsuit involving alleged kickbacks to surgeons.

The Department of Justice (DOJ) announced this week that the Oklahoma Center for Orthopaedic and Multi-Specialty Surgery (OCOM)—as well as its part-owner management company, which includes USP OKC and USP OKC Manager (USPI), Southwest Orthopaedic Specialists (SOS) and two SOS physicians—agreed to the settlement to resolve of false claims. Tenet owns 95% of USPI.

The DOJ alleged improper relationships between OCOM and SOS resulted in the submission of false claims to the Medicare, Medicaid and TRICARE programs.

"Offering illegal financial incentives to physicians in return for patient referrals undermines the integrity of our health care system," said acting Assistant Attorney General Ethan P. Davis of the DOJ's Civil Division in a statement. "Patients deserve the independent and objective judgment of their health care professionals."

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The case dates back to May 2016-18 when a whistleblower filed suit against the OCOM alleging the various violations. Specifically, they alleged, OCOM and USPI provided improper payments to SOS and certain physicians in exchange for patient referrals to OCOM in the form of free or below fair market value office space, employees, and supplies or compensation in excess of fair market value, equity buyback provisions and payments for certain SOS physicians that exceeded fair market value, and preferential investment opportunities.

The settlement also resolves issues arising out of USPI’s "preferential offering" of investment opportunities to physicians at four surgery facilities in Texas, the DOJ said. The claims resolved by the settlement are allegations only, and there has been no determination of liability, officials said.

“Our core values prioritize ethical, responsible behavior, and we will accept nothing short of that from our teams," an OCOM spokesperson said in a statement. "We have taken numerous steps to strengthen compliance safeguards at OCOM to ensure our programs and staff meet the highest standards of integrity – and that we continue to earn the trust of our patients and physicians based only on the quality of care we deliver. We are a stronger organization today with tighter processes, sharper controls, more stringent compliance oversight and a culture that supports our values.”

In filings with the Securities and Exchange Commission, Tenet told investors last year it was party to the legal action and that an agreement in principle had been reached with the DOJ to resolve the issue for approximately $66 million. Tenet established a reserve of $68 million for the matter, including an estimate of the relator’s attorney’s fees and certain other costs to be paid by USPI.

The whistleblower share to be awarded in the case has not yet been determined.